Tag: Corporate

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Thailand – New Government with its Executive and Legislative Policies to Promote Foreign Direct Investment

The new government, which has taken office following a nine-year ruled by General Prayuth Chan-o-cha, signifies Thailand’s return to democracy after the 2014 military coup. Under the leadership of the Pheu Thai Party, led by Prime Ministerial candidate Srettha Thavisin, the government has set forth a visionary agenda, with a primary focus on promoting foreign direct investment to invigorate the country’s GDP.

To achieve this overarching objective, the government has implemented a multifaceted strategy that encompasses both executive and legislative policies. This strategy revolves around three core principles: reducing expenses, increasing income, and expanding opportunities, all designed to enhance Thailand’s overall business environment and attractiveness to foreign investors within the ASEAN region.

One of the government’s primary measures is an extensive economic stimulus program. This program aims to reduce the cost of living and production costs in the country. Key components include significant reductions in electricity prices, petrol prices, personal consumption loan interest rates, and suspension of debt payments for farmers. These measures are strategically designed to enhance the appeal of Thailand as a destination for foreign investment by improving the overall cost structure for businesses operating within its borders.

Furthermore, the government is focusing on boosting the Electric Vehicle (EV) industry as a driver of foreign investment. To achieve this, it plans to reduce tax exemptions for imported EV cars, incentivizing domestic EV manufacturing. By nurturing this emerging sector, Thailand seeks to enhance its industrial and technological capabilities, making it a compelling option for foreign investors looking to capitalize on the growing EV market.

The government has also implemented visa policies to promote foreign investment and tourism. Passport holders from China, Kazakhstan, Taiwan, and India already benefit from a free-visa policy, with plans to extend this privilege to other nationalities in the near future. Such policies foster an environment conducive to foreign business travel and investment in various sectors.

Furthermore, the government is taking steps to upgrade the country’s infrastructure. The proposed land bridge project, connecting the Andaman Sea to the Gulf of Thailand, will significantly enhance international trade routes, positioning Thailand as a pivotal transportation hub in the Indo-Pacific region. This infrastructure investment opens up opportunities for foreign investments in logistics and related industries.

Lastly, the government plans to introduce legislation to fund the 10,000 THB digital wallet project. This initiative will provide digital currency to adults with monthly incomes below 70,000 THB and savings below 500,000 THB. Any unused funds will be channeled into the National Competitiveness Enhancement for Targeted Industries Fund, further enhancing economic competitiveness and making Thailand an attractive destination for foreign investment.

In conclusion, the government’s comprehensive approach to economic development, with a focus on improving the business environment, supporting key industries such as EV manufacturing, and encouraging foreign investment, positions Thailand for substantial growth and prosperity. If effectively implemented, these policies have the potential to transform Thailand into a regional economic powerhouse.

Author: Panisa Suwanmatajarn, Managing Partner.

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Trade Competition Commission Draft Announcement on Suggested Price List

In 1999, Thailand enacted the Trade Competition Act B.E. 2542 (1999) (“Act”), establishing the Trade Competition Commission. The Thai Ministry of Commerce proudly introduced this Act with the aim of attracting Free Trade Agreements (FTAs) from countries around the world, thereby enhancing international trade and investments. In 2017, the Thai government proposed a new version of the Act to address new challenges that the previous version did not cover.

The Act is of paramount importance to Thailand for several reasons. Firstly, they promote healthy competition, encouraging businesses to become more efficient, offer lower prices, improve product quality, and foster innovation. This ultimately benefits consumers by providing them with more choices and better access to goods and services. Secondly, the Act protects consumers from anti-competitive practices that could result in higher prices, reduced product quality, or limited options. By preventing monopolistic behavior and collusion, these laws safeguard consumer interests. Additionally, they help attract foreign investment by demonstrating the fairness and transparency of Thailand’s business environment, which can lead to increased economic growth and align with international trade standards, further enhancing the country’s competitiveness in the global market.

white water boat

Furthermore, the Act ensures a level playing field for businesses of all sizes, supporting the growth of small and medium-sized enterprises (SMEs) while preventing market abuse by larger companies. They foster consumer trust in the marketplace, which can lead to increased spending and economic stability.

One key provision within the Act is Section 54, which prohibits business operators from colluding in various ways such as fixing purchasing or selling prices or any trading conditions that affect the price of goods or services, limiting the number of goods or services produced, purchased, sold, or provided by each business operator, as agreed, knowingly establishing an agreement or conditions for one side to win an auction or a bid for goods or services, or allocating areas in which each business operator will sell, or reducing the sale or purchase of goods or services.

In practice, many manufacturers or wholesalers provide suggested price lists. However, these suggestions, when followed by wholesalers and retailers, can result in monopolistic practices, reduced competition, or the elimination of competition in a given market.

low angle photography of glass buildings

To address this issue, the Trade Competition Commission has been granted authority under Section 17(3) of the Act. This authority enables the Trade Competition Commission to regulate business operations and issue Announcements to enforce free and fair competition. In response, the Trade Competition Commission has drafted an Announcement on Suggested Price List Guidelines (“Announcement”).

Once enacted and enforced, this Announcement would prohibit business operators to conduct such as refusing to sell goods and services, reducing the sales of goods and services, or increasing the price of goods and services without reasonable grounds. This Announcement is intended to reinforce Section 54(1) of the Act, preventing monopolies, oligopolies, or any reduction in competition within relevant markets.

Author: Panisa Suwanmatajarn, Managing Partner.

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Proposed Rehabilitation Processes for Small and Medium Enterprises (SMEs)

In 2016, the regulation concerning small and medium enterprises (“SMEs”) was initially introduced to aid SME owners in managing their debts through rehabilitation processes that safeguard the interests of both debtors and creditors.

However, as of 2023, there are over 3 million SMEs in Thailand, playing a critical role in driving the country’s economy. Recognizing this, the Legal Execution Department has expressed a keen interest in ensuring the well-being of SMEs. To this end, they have conducted a public hearing on the draft amendment of the Bankruptcy Act B.E. 2483 (1940), specifically focusing on the business rehabilitation processes for SMEs. Consequently, active efforts are underway to formulate regulations.

In the past, debtors seeking to manage their debts through rehabilitation processes were required to adhere to the provisions outlined in the Bankruptcy Act B.E. 2483 (1940). These requirements included being insolvent and indebted to one or multiple creditors. However, the recent introduction of business rehabilitation proceedings for SMEs has brought about a new rule by eliminating the requirement of being an insolvent person. This means that anyone, regardless of their solvency status, can now initiate the rehabilitation processes.

The recent amendment to the Bankruptcy Act B.E. 2483 (1940) aims to simplify the business rehabilitation processes, making it more accessible for small debtors. This simplification is driven by the current economic and social conditions, and it offers several benefits for debtors. Notably, it introduces a new section that includes an accelerated business rehabilitation processes.

The key summary of the amendments is as follows:

  1. Broadening the definition of debtors in Section 90/91: Previously, the term “debtor” was limited to those specifically prescribed by the Office of SMEs Promotion (OSMEP). The amendment expands the definition to include any juristic person, regardless of the legal classification of SMEs. This change provides SMEs business owners with the opportunity to participate in business rehabilitation, enabling them to restructure their debts and maintain the continuity of their businesses.
  • Revision of the debt threshold in Section 90/92: When a debtor is unable to pay one or several creditors in aggregate, they may file a petition with the court for business reorganization. For individual debtors, the debt threshold has been lowered from 2 million baht to 1 million baht. For juristic persons, the threshold has been revised from not less than 3 million baht to not less than 2 million baht, with an upper limit of 50 million baht. These changes apply regardless of the debtor’s financial status or the number of creditors involved. However, both types of debtors must demonstrate a reasonable cause and prospects for the reorganization of their businesses.
  • Extension of the Business Reorganization Plan (“Plan“) period in Section 90/96(9): Recognizing that a 3-year plan may be insufficient, the amendment extends the Plan period from 3 years to 5 years. This extension aims to enhance efficiency and provide debtors with more opportunities to effectively proceed with their reorganization efforts while ensuring that creditors receive full payment of their debts.
  • Removal of certain rehabilitation processes in Section 90/95: Prior to the draft amendment, individuals seeking business reorganization has to wait for a court order granting absolute control over their property and approval of the Plan before filing a petition for reorganization. This process involved strict legal requirements, such as providing reasons for business reorganization, detailed asset information, and principles and methods, as per Section 90/96 of the Bankruptcy Act B.E. 2483 (1940). These requirements often proved time-consuming and costly. The draft amendment has eliminated some of these processes, allowing debtors or legally authorized individuals to initiate the plan. This change allows both debtors and one or several creditors of the debts arising from a business operation to take the necessary steps toward rehabilitation.
low angle photography of glass buildings

However, the recent amendment to the Bankruptcy Law B.E. 2483 (1940) is currently pending approval from the Council of Ministers. After this, the next stage will involve the draft amendment proceedings to the Members of the Parliament for consideration and approval before proceedings to the King’s endorsement and publish in the Royal Gazette.

Author: Panisa Suwanmatajarn, Managing Partner.

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Proposed Amendment to the National Competitiveness Enhancement for Targeted Industries Act

The National Competitiveness Enhancement for Targeted Industries Act, B.E. 2560 (2017) (“Act”), which came into force on February 14th, 2017, established the Commission on National Competitiveness Enhancement for Targeted Industries Policies (“Commission”). This Commission, chaired by the Prime Minister and consists of various key government officials. The duty of this Commission is to drive policies aimed at enhancing specific industries.

The Act grants the Commission the authority to make announcements and prescribe targeted industries. The Announcement No. 1/2560 (2017) on the Investment Promotion Rules under the Act was published specifying ten target industries which are the modern automotive industry, smart electronics industry, quality tourism industry, agricultural and biotechnology industries, high-value food processing industry, robot industry, aviation industry, biofuel and biochemical industry, digital industry, and comprehensive medical industry.

The primary objective of this Act is to provide funding for the business operators in the aforementioned targeted industries as determined by the Commission whom a promotion certificate is granted from the Thailand Board of Investment.

However, there is one critical issue in need of amendment related to the funding mechanism as outlined in Section 29 of the Act. Section 29 specifies that the fund comprises several sources, which are (1) an initial capital allocation by the Government (amounting to 10 billion THB), (2) subsidies from the government, (3) donations or gifts of money or property, (4) money or property vested in the fund, and (5) interest or returns on the fund’s assets. Importantly, the Act does not require funds allocated to the C mission to be remitted back to the Treasury as state revenue. This section of the Act does not establish a legal authority for the government to consistently allocate a portion of taxes collected to adequately fund the Commission.

low angle photography of high rise building

The proposed amendment to Section 29 seeks to introduce a new provision, Section 29(6). This amendment would empower the Minister of Finance to allocate funds from increased taxation as deemed necessary. Such an amendment is crucial as it would bolster the financial resources available to the Commission, thereby mitigating the adverse effects of the increased tax rates imposed in accordance with the Global Minimum Tax of 15%. This tax is levied upon large multinational enterprises with revenues of not less than 750 million EUR (equivalent to approximately 28 billion THB) generated within the jurisdictions of the countries that are members of the Organization for Economic Co-operation and Development (OECD), including Thailand.

In conclusion, the proposed amendment to the Act, specifically the inclusion of Section 29(6), is a vital step towards ensuring the sustained growth and competitiveness of the targeted industries. By allowing the Minister of Finance to allocate funds from increased taxation, these industries will receive enhanced assistance in navigating the challenges posed by the Global Minimum Tax and fostering their continued development.

Author: Panisa Suwanmatajarn, Managing Partner.

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The Effectiveness of Chat Messages and Thumbs-Up Emojis as Approval Signals

Thailand is now entering the digital era, and electronic transactions are more common than ever. Thai people, in particular those who lend and borrow money, frequently enter into loan agreements using chat messages or even a thumbs-up emoji via online platforms. It is arguable whether chat messages via these internet communications will be deemed as evidence in a lawsuit for prosecution and legal action.  

According to Civil and Commercial Code (“CCC”), Section 653 paragraph one, “A loan of money for a sum exceeding two thousand baht in capital is not enforceable by action unless there is some written evidence of the loan signed by the borrower,” so the loan agreement requires written evidence signed by the borrower to enforce in legal prosecution. Considering the CCC alone, chat messages or a thumps-up emoji seem to be an issue as no signature is affixed.

person holding white android smartphone

Without a signature in this regard, will a loan agreement not be formed? Electronic Transaction Act B.E. 2544 (the “Act”) enables online conversations to be used as proof of loan agreements under Sections 7, 8, and 9. Section 7 states that information shall not be denied legal effect and enforceability solely because it is in the form of a data message. Section 8 states that, subject to Section 9, if the law requires that any transaction be made in writing or evidenced by writing, and if the information is generated in the form of a data message that is accessible and usable for subsequent reference without its meaning being altered, it shall be deemed that such information is already made in writing or evidenced by writing. Section 9 specifies that when a person enters a signature in any writing, it is regarded that a data message carries a signature if it is identifiable and demonstrable, and such a method is reliable and meets the requirements of Section 9.  

photo of man in white hoodie standing near brown wall while using his smartphone

As a result, online conversations between the borrower and the lender are deemed as signed and written evidence. Even the Supreme Court recently rendered a judgment in accordance with the Act, as stated in the judgement number 6757/2560, in which the plaintiff sent an online chat message releasing the defendant from the debt, this case had been rendered in accordance with the Act that the debt release via online message deemed as written evidence of debt releasing. Thus, debt under the loan agreement was extinguished. Accordingly, the thumps-up should be interpreted as it is.  

According to the aforementioned Act and the subsequent judgment, it is clear that Thai law encourages electronic transactions, and even the civil court accepts the existence of electronic transactions, indicating an important beginning of the evolution of usage and interpretation to be more modern and efficient.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand – 2023 Updates on Company Registration

Currently, company registration can be done via 2 channels, one being the normal regime (physically submitting applications at the Department of Business Development (“DBD”)) and the other through the online system, DBD e-Registration. As people may not be familiar with the online registration system yet, this memo is then intended to give you a summary of steps for online company registration, and a summarized differences between the 2 channels of company registration.

Steps for Company Incorporation via e-Registration System shall be as follows:

  1. Name Reservation: Any of the promoters may reserve the company name on DBD’s website in which English and Thai names are required.
  2. Username and Account Creation:
    • Account creation can be done via DBD e-Registration’s website.
    • After accepting the terms and conditions, the system would proceed to the authentication and verification page. Fill in, submit the necessary information, and complete the authentication and verification process.
  3. Authentication and Verification Process: Users’ authentication and verification can be done by either of the following methods:
    • e-KYC;
    • Self-authenticating with the officials at DBD;
    • Giving power to other person to submit authentication on behalf of the user; or
    • Using personal certificates (a document certifying identity of an individual for the purposes of digital signature, encryption, and decryption) instead of self-authenticating with the officials.
    • Once the authentication and verification process is completed, an activation link will be provided to the user’s email. Click the link to activate the user.
  4. Memorandum of Association Registration and Company Incorporation: Registration of Memorandum of Association (“MoA”) can be done via the e-Registration system, by filling in the necessary information and attaching relevant documents (e.g. picture file of the company’s seal, minutes of company incorporation meeting, map, etc.)
  5. Documents Status Tracking: The status of documents review can be tracked through the online system.
  6. e-Signatures:
    • Once the application has been approved, the applicant will be notified by email, and promoters can proceed with the application signing.
    • The applications can be electronically signed using the e-Signature portal. Each promoter shall log-in with their own account and e-sign the document by clicking and confirming with an OTP passcode.
  7. Documents Confirmation and Fees Payment:
    • The application that has been signed by the promoters shall appear for confirmation.
    • Once the application is confirmed, the applicant can proceed to the fees payment page.
    • The applicant can either pay the fees through transfer, debit or credit card.
    • Once the payment is completed, the proof of registration (i.e. company affidavit) will be available for download as a PDF file.

Differences

TopicPhysical Registratione-Registration
1. Registration FeeThe normal regime registration shall be of the normal registration rate, which is:     Totaling: Baht 5,500  

Remark: The fee for amendment of MOA is Baht 500		Generally, the fee for online registration is the same as physical registration. However, there is a Ministry of Commerce (“MoC”)’s Notification providing discounts on the registration fee for a certain period.  

From January 1st, 2021, until December 31st, 2023, the online registration fee for company registration is discounted by 50%, totaling Baht 2,750

Remark: The fee for amendment of MOA is also discounted, totaling Baht 250
2. TimelineRegistration and incorporation can be completed in 1 day2-5 Working days, depending on the number of other applications submitted at the time
3. QueuingApplicants can either:
– Walk-in; or
– Reserve physical queue through MoC’s website

Remark: In case of walk-in, the process of registration may not be done in 1 day		No queuing is required for e-Registration
4. Amendment of Company Registration ApplicationsIn the event that there is a typo or mistake on the submitted applications, the said applications shall either be replaced with a new form, or amended and signed by the promotersThe amendment of applications can be done through the e-Registration system itself, which is easier and faster than the normal regime

In summary, the e-Registration system is intended to aid businesses’ incorporation process, including negating the necessity of back-and-forth documents signing process, revision of applications, and others. Moreover, the fee for company incorporation via the e-Registration system is discounted. Should you have any questions, or require our assistance, feel free to contact us.  

Author: Panisa Suwanmatajarn, Managing Partner.

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Time Extension for Operating of Liquor Production Facilities

To facilitate the liquor production licensees who may not construct liquor factories, install machinery and equipment used for liquor production or initiate a liquor production on time as set out in the licenses, the Excise Department has drafted a Notification of the Excise Department on Determining Causes of Necessity, Procedures for Requesting and Permission to Extend the Construction Period of a Liquor Factory, Installation of Machinery and Equipment Used for Liquor Production and the initiating of Liquor Production (“Notification”) for the purpose of extending the period of time for Initial liquor production.

blue plastic pail

This Notification applies to the liquor production licensees who may not be able to construct liquor factories, install machinery and equipment used for liquor production or initiate a liquor production on time as indicated in the licenses due to (1) natural disaster, (2) laws, notifications or regulations issued by government agencies, (3) waiting for permission from other agencies or (4) other necessary causes with explicit evidence. Those liquor production licensees may submit an application requesting for an extension together with relevant documents before the period specified in a liquor production license has lapsed. The application may be submitted to an Excise Official for their consideration at the Area Excise Office or Branch Area Excise Office in the area where the liquor factory is located. After consideration, the Excise Official will render its order as follows:

  • In the case that the Excise Official considers the submitted application and its supporting documents are incorrect or incomplete and such issues can be amended at that time, the Excise Official shall notify the applicant to make an amendment immediately. Or else, if such issues cannot be amended at that time, the Excise Official shall record such issues and list of additional documents to be submitted together with imposing a period of time as deemed appropriate so that the applicant may amend or submit additional documents within such period of time.
  • In the case that the Excise Official considers that the submitted application and its supporting documents are correct and complete or the applicant has corrected issues or submitted additional documents as ordered within the imposed period of time, the Excise Official shall report to either the relevant Area Excise Office or the Director of the Bureau of Standard and Tax Collection 1 for further consideration.
pile of gray metal drumt inside factory

Furthermore, kindly be noted that this Notification is only a draft that has not yet been published in the Royal Gazette. Hence, it is not enforced at the moment. Upon approval by all relevant authorities as required by laws and published in the Royal Gazette, it shall repeal the Notification of the Excise Department on Determining Causes of Necessity, Procedures for Requesting and Permission to Extend the Construction Period of a Liquor Factory, Installation of Machinery and Equipment Used for Liquor Production and Initiating of Liquor Production issued on December 1st, 2554 (2021) and this Notification shall become enforced since the date of publication in the Royal Gazette.

Author: Panisa Suwanmatajarn, Managing Partner.

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On 11 May 2021, the Cabinet has approved a draft Act for Amendment to the Thai Public Limited Companies Act B.E. 2535 (1992) (“PCA”) No. .. B.E. …. (“Act”) as proposed by the Ministry of Commerce endorsed by the Council of State. The Act will be considered by the House of Representatives thereafter.
The Act has 6 main issues as follows:

  1. To allow public limited companies to announce company’s matters, information and news through electronic means other than Thai newspapers. Currently, the PCA demands public limited companies to advertise its matters, information and news through Thai daily newspapers only.
  2. To provide options for document submission and delivery by allowing public limited companies or their board of directors to submit and deliver documents to their directors, shareholders or the companies’ creditors electronically.
  3. To amend and provide options for the board of directors and shareholders’ meetings by allowing them to be held electronically according to the law related to meetings through electronic means. The location of the meeting will be at the company’s headquarters or any nearby province unless the Articles of Association of the company specified otherwise. In any event, the location will need to be in Thailand.
  4. To allow more flexible methods for calling the board of directors’ meetings such as in case of no chairman, the vice-chairman can call for the meetings and in the event that there is no chairman and vice-chairman, 2 members of the board or more are empowered to call for the meetings.
  5. To allow shareholders to call for shareholders’ meetings electronically in the same manner that the board of directors can do.
  6. To allow proxy appointments for attending the meetings be done electronically.
    Overall, the aim of this amendment is to update procedural matters of the management of Thai public limited companies to allow comfortabilities for all parties involved and to be in alignment with the technology of a modern time.