Startup Promotion and Development Act: Facilitating Growth and Innovation

The Draft Startup Promotion and Development Act (“Draft”) aims to bolster Thailand’s startup ecosystem by addressing legal and operational challenges that hinder growth and competitiveness. Recognizing the pivotal role startups play in driving economic progress and innovation in an increasingly dynamic global landscape, the Draft seeks to create a supportive legal framework to enhance entrepreneurial capacity, funding access, and business networking. The public consultation period for the Draft is open until 27 October 2025.

Regulatory Framework and Authorities:

The Draft establishes the Startup Promotion Committee, tasked with overseeing and formulating policies to foster startup development. The National Innovation Agency (NIA) acts as the primary coordinator, bridging public and private sectors to streamline access to benefits and incentives for qualifying startups. The NIA also operates a one-stop service center, disseminates information on rights and benefits, and facilitates connections to funding opportunities.

Eligibility Criteria for Startups:

To qualify for the benefits outlined in the Draft, startups must meet specific criteria and submit a self-declaration to the NIA, including:

•  Establishment Period: The startup must be a limited company incorporated for no more than 10 years at the time of application.

•  Revenue Threshold: An average annual revenue not exceeding 300 million baht over the past three consecutive years.

•  Dividend Status: The startup must not have paid dividends.

•  Ownership Structure: The startup must not be controlled by another company, except in cases where the controlling entity is itself a startup or a company established by, or in partnership with, a higher education institution to promote research and innovation.

Startups are required to annually update their information and supporting documents through the NIA’s electronic system. Upon verification, eligible startups are officially recognized and granted access to the prescribed benefits.

Rights and Benefits for Startups:

The Draft provides several key benefits to recognized startups, including:

• Exemption from Shareholding Restrictions: Startups are permitted to hold their own shares to support fundraising, operations, and expansion, or to offer shares to the public and issue debentures, subject to Securities and Exchange Committee regulations.

•  Additional Entitlements: Benefits related to taxation, immigration, funding, and intellectual property are managed by relevant agencies, ensuring a comprehensive support system.

These benefits are available for five years from the Draft’s official publication date, with an extension of up to 10 years for startups engaged in agricultural activities.

Penalties for Non-Compliance:

The Draft includes provisions for penalties to ensure adherence to its regulations, maintaining transparency and integrity within the startup ecosystem.

What Startups Should Prepare:

To take full advantage of the Draft, startups should:

1.  Verify Eligibility: Ensure compliance with the establishment period, revenue threshold, dividend status, and ownership structure requirements.

2.  Prepare Documentation: Gather and maintain accurate records for submission to the NIA, including financial statements and ownership details, to support the self-declaration process.

3.  Engage with the NIA: Utilize the NIA’s one-stop service center and electronic system for updates and to access funding and networking opportunities.

4.  Understand Benefits: Familiarize themselves with available exemptions and incentives, particularly regarding shareholding, taxation, and intellectual property, to maximize strategic growth.

5.  Stay Compliant: Adhere to the Draft’s regulations to avoid penalties and sustain eligibility for benefits.

Conclusion

The Draft represents a significant milestone in modernizing Thailand’s legal framework to support startups, foster innovation, and strengthen national competitiveness. By establishing a more transparent, flexible, and growth-oriented regulatory structure, the Draft provides a robust foundation for a thriving and dynamic startup ecosystem in Thailand. Upon enactment, it is anticipated to cultivate a more vibrant and investor-friendly environment that will accelerate the growth and success of emerging businesses throughout the country.

Author: Panisa Suwanmatajarn, Managing Partner.

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