Guide To Doing Business in Thailand

Guide to
Doing Business in Thailand

Contents
04. Chapter 01: Introduction
05. Chapter 02: Legal System
08. Chapter 03: Foreign Investment
12. Chapter 04: Business Vehicles
15. Chapter 05: Real Estate
22. Chapter 06: Securities and Exchange
26. Chapter 07: Taxation
28. Chapter 08: Labour
31. Chapter 09: Intellectual Property
36. Chapter 10: Environmental Regulations
43. Chapter 11: Trade Competition
51. Chapter 12: Insolvency and Liquidation
57. Chapter 13: Dispute Resolution
2 Guide to Doing Business in Thailand

84. Chapter 14: Other Laws
89. List of Abbreviations
This booklet provides general advice only and should not be treated as a substitute for legal advice.
While care has been taken to ensure that details are correct, no responsibility can be taken for losses
arising from reliance upon its contents.
The information in this publication is current to September 2015.
MAYER BROWN JSM

Chapter 01
Introduction
The Kingdom of Thailand is centrally located within Southeast Asia and shares borders with Myanmar, Laos,
Cambodia and Malaysia. With a population of over 68 million, Thailand takes pride in the fact that it is the only
Southeast Asian country never to have been colonised. As the “rice basket of Asia”, Thailand provides her
population with an abundance of food, and is also rich in natural resources. This has allowed Thailand to focus
on a modernisation programme and the development of a technological infrastructure to compete in the Asian
economy. u

Chapter 02
Legal System
The main body of Thai law assumes the characteristics of the Roman-based codified system, coupled with a blend of
ingredients from English common law and Thailand’s own traditional laws. The supreme law of Thailand is the Constitution
and the main legislative codes of Thailand are the Civil and Commercial Code, the Penal Code, the Civil Procedure Code, the
Criminal Procedure Code, the Revenue Code, and the Land Code.
Thailand’s judiciary is composed of four main systems: the Court of Justice, the Administrative Court, the Constitutional
Court and the Military Court. The Court of Justice is the largest of the court system and has three tiers: the Court of
First Instance (Sarn Chan-ton), the Court of Appeals (Sarn U-thorn) and the Supreme Court of Justice (Sarn Dika). The
Administrative Court has two tiers: the Administrative Court of First Instance and the Supreme Administrative Court of
Justice, and their main jurisdiction is to deal with litigation between the state or government body and private citizens. The
Constitution Court is a high court established to settle governmental and constitutional matters. The Military Court has
jurisdiction to try military criminal cases and other cases prescribed under the law. u
MAYER BROWN JSM 5

Chapter
Contents 03
Foreign Investment
Investment by foreigners is encouraged, with the exception of investment in key sensitive industries. To facilitate the flow of
investment into the country, and to determine the appropriateness of investment proposals, in 1977 the Thai government
established the Board of Investment (BOI) and enacted the Investment Promotion Act B.E. 2520 (1977). The BOI’s
requirements and policy have been updated and revised from time to time so as to further encourage overseas investment,
particularly in those industries which are beneficial to Thailand’s economy, which bring new technology to Thailand, create
employment and enable social development.
1.1 Foreign Business Act

The main legislation governing foreign business activities is the Foreign Business Act, B.E. 2542 (1999) (FBA). The FBA limits
the right of foreigners to engage in certain business activities in Thailand; it also defines the term “foreigner” and categorizes
restricted activities into three lists.
a. Definition of “foreigner” under the FBA:

1. A natural person who is not of Thai nationality;
2. A juristic person who is not registered in Thailand;
3. A juristic person who is registered in Thailand and is either:
• a juristic person, with at least one-half of its share capital owned or contributed by a person under (i) or (ii)
above, or
• a limited partnership or ordinary partnership, which is registered as having a person under (i) above as the
managing partner or the manager;
4. A juristic person, who is registered in Thailand, with at least one-half of its share capital owned or contributed by
a person under (i), (ii) or (iii) above.

b. Restricted activities for foreigners under the FBA:
1. List 1 – Business activities on this list are absolutely prohibited to foreigners without exception. Such activities
include, for example, land trading, the press, rice farming, livestock farming, forestry and timber processing
from a natural forest, extraction of Thai medicine herbs.
2. List 2 – Business activities on this list are prohibited to foreigners, unless permission is granted by the Minister of
Commerce with approval of a Cabinet resolution, or foreigners are granted an investment promotion from the
Board of Investment or are permitted to operate industrial or export trade by the Industrial Estate Authority of
Thailand (IEAT).
3. Business activities on List 2 relate to national safety or security, to matters of culture, traditions and customs,
and to national resources and the environment, and include, for example, the production, distribution and/or
maintenance of firearms, ammunition, gun powder, explosives, and ships, aircraft and other vehicles for military
use; trading in antiques; the production of wood carvings, goldware, silverware, nielloware, bronzeware or
lacquerware; the production of sugar from sugar cane; the production of rock salt; salt farming; mining; and
timber processing for production of furniture and utensils.
4. List 3 – Activities on this list are considered those in which Thai nationals are not yet ready to compete with
foreigners. Therefore, foreigners are restricted from engaging in such activities unless permission is granted
by the Director-General of the Company Registration Office of the Ministry of Commerce with the approval
of the Foreign Business Committee, or foreigners are granted an investment promotion from the BOI or are
permitted to operate an industrial or export trade by the IEAT.
Business activities under List 3 include, for example, wholesale of all types (with minimum capital of each store
being less than THB 100 million), retail sale of goods of all types (with total minimum capital being less than THB
100 million or with minimum capital of each store being less than THB 20 million), legal services, accounting
services, rice milling, brokerage or agency businesses, sale by auction, internal trade related to traditional
agricultural products, sale of goods and beverages, hotel business (with the exception of hotel management
service), guided touring, and other service businesses.
c.. Exemptions from requirements, as set forth in the FBA:

Notwithstanding the above, exemptions from certain requirements, as set forth in the FBA, may apply to foreigners,
including:
• Operating a business specified on the lists by virtue of a treaty to which Thailand is a party or by which
Thailand is bound in consequence of obligations there from; or
• Operating a business specified on the lists with the permission of the Thai government for a specific period.
In addition, there are other conditions prescribed under the FBA (or which may be imposed by a relevant authority)
that foreigners are required to observe and comply with, including the minimum capital requirement, the number
of foreign directors having domicile in the country, the debt-to-equity ratio, minimum capital for commencing
business operations and the period for which it is to be maintained, required contributions of technology, know-how
or assets, plus any other conditions prescribed by the government or in the treaty.
Foreigners or Thais who are in violation of the FBA could be subject to punishment by imprisonment and/or fine.
Also, the court may order the cessation of the business operation or the cessation of the undertaking, or order the
cessation of shareholding or partnership, as the case may be. Those who violate the court’s order are liable to a daily
fine of between THB 10,000 and THB 50,000 throughout the violation period.
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03. Foreign Investment
1.2 Investment Promotion

The BOI through the Investment Promotion Act provides both tax and non-tax incentives, state guarantees and business
protection to encourage foreign investment in Thailand. These promotional privileges, however, often come with conditions
such as stipulations concerning the amount of foreign ownership, amount and source of capital, nationality and number of
workers, technicians and experts, minimum production levels and/or the debt-to-equity ratio.
a. Incentives
The following investment incentives can be provided to foreign investors.
1. Tax incentives:
• Exemption/reduction of import duties on imported machinery, raw or essential materials and components;
• Exemption of corporate income taxes for three- to eight-year periods with permission to carry forward
losses and deduct them as expenses for up to five years; and
• Exclusion of dividends, derived from promoted projects, from taxable income during the corporate tax
holiday.
2. Additional privileges for projects located within industrial estates or promoted industrial zones special
investment promotion zones:
• 50 percent reduction in corporate income tax of net profit derived from its investment for five years after
expiry of a normal income tax holiday;
• Permission to double the cost of transportation, electricity and water supply as deductions from taxable
corporate income for 10 years from the date of first revenue derived from the promoted activities; and
• 75 percent reduction in import duty of the normal rate on raw and essential materials used in
manufacturing for domestic sales for five years, provided that the board grants approval on an annual basis
and the raw or essential materials imported are not of similar quality to that available in the country or to
that which is sufficiently available in the country.
3. State guarantees:
• Against nationalisation;
• Against competition from new activity of the state;
• Against state monopolisation of the sale of products similar to those produced by the promoted project;
• To grant permission to export at all times; and
• Not to allow any government agency, state organisation or state enterprise to import any kinds of products
similar to those produced by the promoted activities by granting import duty exemption.
4. Non-tax incentives:
• To allow entry to foreign nationals to undertake investment feasibility studies;
• To allow to bring in foreign experts and technicians to work in the promoted projects as well as their spouse
and dependants;
• To allow remittance of money abroad in foreign currency; and
• To own land to carry out the promoted activities.

b. Investment Promotion Zones:
• Zone I encompasses the greater Bangkok Metropolitan Area, i.e. Bangkok, Nakhon Pathom, Nonthaburi, Pathum
Thani, Samut Prakan, and Samut Sakhon.
• Zone II covers projects located in Angthong, Ayutthaya, Chachoengsao, Chonburi, Kanchanaburi, Nakhon
Nayok, Phuket, Ratchaburi, Rayong, Samut Songkhram, Saraburi, and Suphanburi.
• Zone III covers the remaining 59 provinces that are not part of Zones I and II.
The privileges granted by the BOI are also subject to the projects being located within Investment Promotion Zones.
c. Criteria for Approval:

1. The value added must be at least 20 percent of sales revenue, except for projects that manufacture electronic
products and parts for processing agricultural produce, and other projects granted special approval by the BOI;
2. The debt-to-equity ratio should not exceed 3:1;
3. New production processes and new machinery must be used. Using old machinery requires BOI’s prior
approval;
4. The BOI will prescribe special conditions on the project’s location and the type of pollution treatment as well as
environment protection systems if necessary; and
5. A feasibility study on the project must be carried out if the investment capital (excluding the cost of land and
working capital) is to exceed THB 500 million.
1.3 Industrial Estates

Industrial Estates are developed and managed by the IEAT. Industrial estates are mainly divided into two zones: areas
in General Industrial Zones (GIZ) are reserved for industries that manufacture products for domestic and/or export
consumption; areas in Export Processing Zones (EPZ) are reserved for the location of industries that manufacture products
for export only.
Among other privileges available for operators in the Industrial Estates, application for land entitlement and permits for
expatriates to enter and work in Thailand may be submitted to the IEAT for approval.
1.4 Particular Areas of Business

Particular businesses can require a minimum number of Thai majority ownership of more than half of the total issued shares
and a minimum number of directors to be Thai nationals. For example, the Financial Institution Business Act allows foreigners
to hold a maximum of 25 percent of the shares in a commercial bank and at least 75 percent of the total number of directors
must be Thai nationals; and the Insurance Acts (including life insurance and casualty insurance) require the majority of voting
shares to be held by Thai nationals (whether natural or juristic persons).
1.5 Foreign Exchange Control

The exchange control system of Thailand is administered by the Bank of Thailand (BOT). In practice, however, approval of
various transactions subject to the exchange control regulation is delegated by the BOT to the commercial banks in Thailand,
with the exception that some transactions are still required to obtain approval from the BOT, which in practice such approval
is sought through the commercial bank.
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03. Foreign Investment
Basically, there are no restrictions on capital investment and foreign loans. Remittances of investment funds and foreign
loans into Thailand are unlimited and freely permitted provided they are conducted through the commercial banks and
surrendered to a commercial bank or deposited in a foreign currency account opened with a commercial bank in Thailand
within 360 days. Repatriation of dividends and profits as well as loan repayments and accrued interest payments, after tax
deductions, can also be made through the commercial banks, subject to the provision of the required supporting documents
to the satisfaction of the commercial bank.
Export proceeds in the amount of US$50,000 or above must be remitted into Thailand immediately after payment is received,
which must not be later than 360 days from the export date. The proceeds must be sold to a commercial bank or deposited in
a foreign currency account opened with a commercial bank in Thailand within 360 days of receipt.
Importers may freely purchase or withdraw foreign currencies from their own foreign currency accounts for import
payments upon submission of supporting evidence. Letters of credit may also be opened without authorisation.
All proceeds of service amounting to US$50,000 or more must be remitted into Thailand immediately after payment is
received (not later than 360 days from the transaction date) and sold to a commercial bank or deposited in a foreign currency
account opened with a commercial bank in Thailand within 360 days of receipt. u

Chapter 04
Business Vehicles
In Thailand, as in other jurisdictions, a combination of commercial, legal and tax factors dictates the choice of vehicle that
a foreign investor will use to conduct business. The main factor which has great influence on the choice of business vehicle
in Thailand is the legal requirement of local participation. There are several laws which impose local majority ownership
requirements on specific business operations, including the Foreign Business Law and restrictions under the Land Code.
In most cases, because of local participation and ownership requirements, a joint venture in the form of a private limited
company is the most appropriate vehicle for foreign investors.
2.1 Private Limited Company

• Registration – Basically, in order to set up a private limited company, there must be at least three natural persons
acting as promoter to prepare and have a Memorandum of Association (MOA) registered with the Department
of Business Development of the Ministry of Commerce (MOC). The official fee to register the MOA is THB 50
per every THB 100,000 of the capital, subject to a minimum fee of THB 500, and a maximum of THB 25,000.
• The promoter arranges for share subscription whereby each promoter also subscribes at least one share. Once
all shares have been subscribed, the promoter holds a statutory meeting to approve the company’s Articles
of Association, ratify all transactions done by the promoter, appoint the first director(s) and the authorised
director(s), appoint the auditor (fixing his/her remuneration), call for payment of the share subscription, etc.
Thereafter and once the company’s board of directors has received payment of the share subscription from all
subscribers (which must be at least 25 percent of the par value), the director can arrange for the registration of
the company’s incorporation with the MOC. In practice, the registration of incorporation of a private limited
company could be completed within one day, provided all required documents are submitted and all statutory
requirements have been fulfilled. The official fee to register the company incorporation is THB 500 per every
THB 100,000 of the capital, subject to a minimum fee of THB 5,000, and a maximum of THB 250,000.
It is also possible to register the MOA concurrently with the company incorporation, provided that all required
documents are submitted and all statutory requirements have been fulfilled and such application for both
MAYER BROWN JSM 11

04. Business Vehicles
registrations is submitted to the MOC no later than three months from the date of the statutory meeting.
The company incorporated with the registered capital of more than Baht 5 million must also submit, along with
the application for registration of company incorporation, the evidence issued by the bank confirming that
any one of the authorised director has received the share subscription payment of all paid-up shares from all
shareholders of the company, unless all authorised directors of the company are foreigners and do not have
bank account in Thailand. In addition, once the Registrar has effected the registration, the company shall
also submit, within 14 days from the date of registration, the evidence issued by the bank confirming that the
company has received such share subscription payment in the company’s bank account.
Furthermore, in the event the company increases its registered capital to be more than Baht 5 million, the
company must also submit, along with the application for the registration of the capital increase, the evidence
issued by the bank confirming that the company has received such share subscription payment in the
company’s bank account.
• Shares – The shares of a private limited company can only be issued as ordinary or preferred shares. Preferred
shares have preferential rights attached to them as prescribed in the Articles of Association and such
preferential rights cannot be altered. A private limited company is not allowed to own its own shares or take
them in pledge according to the law.
Shares are transferable without the consent of the company, unless otherwise provided by the Articles of
Association.
Dividends on shares are paid out of profit in accordance with the resolution of a shareholders’ meeting. In
addition, interim dividends can also be paid by the director from time to time if it appears to the director that
there is reasonable amount of profit to do so. However, beforehand, the dividends must be appropriated to a
reserve fund until the reserve fund reaches one-tenth of the capital of the company or more as prescribed in the
Articles of Association.
• Shareholders – A private limited company requires at least three shareholders, who must be either natural or
juristic persons.
• Directors – The number of directors is fixed by the shareholders’ meeting and there is no statutory minimum
requirement on the number of directors. However, from a practical perspective, a company should have at least
two directors in order to be able to hold a board meeting. Please note that at present, Thai law does not permit a
written resolution without a board meeting having been held.
• Minority shareholders protection in a private limited company – There are many mechanisms which can be
established to protect minority shareholders’ interest. For example, it is possible to incorporate in the Articles
of Association the right of the minority shareholders to elect a controlling percentage of the board of directors,
or in order to form a quorum, the director appointed by the minority shareholders must
be present in a board of directors’ meeting, or all shareholders’ resolutions shall require a minimum approval of
more than half of all votes of the company.
2.2 Public Limited Company

The establishment of a public limited company requires at least 15 promoters (natural persons only), who must prepare the
MOA and have it registered with the MOC, as with private limited companies. At least half of the number of the promoters
must have their domicile in Thailand.
As with private limited companies, after the MOA registration, the promoter must arrange for share subscription whereby
the promoters are required to subscribe at least 5 percent of the total share capital, and hold a statutory meeting to approve
the company’s Articles of Association, appoint the director(s) and auditor, etc. Once all statutory requirements have been
undertaken and fulfilled, the director must arrange for registration of its incorporation.

There is no statutory requirement on the minimum registered capital or par value of share for a public company, but all shares
capital must be of the equal par value and the shares must be fully paid-up.
A public limited company must have a board of directors consisting of at least five directors, at least half of whom must reside
in Thailand.
The offer of shares for sale to the public must be in accordance with the laws governing securities and exchange, and approval
must have been obtained from the Office of the Securities and Exchange Commission.
2.3 Partnership
Thai and Western concepts of partnership are broadly similar. A partnership is a form of business organisation established by
two or more persons, who have agreed to join for a common undertaking to share profits derived there from. There are two
types of partnership, namely ordinary partnership and limited partnership.
In respect of an ordinary partnership, all partners are jointly and unlimitedly liable for all debts and obligations of the
partnership. Each partner may contribute money, other properties or services to the partnership. Ordinary partnerships can
be registered or non-registered. A registered ordinary partnership is considered a legal entity separate and distinct from the
individual partners and is liable for corporate income tax. In addition, any restriction of the power of a partner to bind other
partners can be claimed against a third party. Also, liability of a partner in respect of the obligations incurred by the registered
ordinary partnership is limited only for a period of two years after such partner leaves the partnership.
A limited partnership has a statutory requirement to be registered, otherwise it is deemed an ordinary partnership in
which all partners are jointly and unlimitedly liable for all obligations of the partnership. There are two types of partnership:
partners whose liability is limited, and partners who are jointly and unlimitedly liable for all obligations of the partnership. In
terms of management, only an unlimited partner can manage a limited partnership. If a limited partner interferes with the
management, that partner will lose his or her limited partnership status and will become jointly and unlimitedly liable for all
obligations of the partnership.
2.4 Branch Office

A foreign company may establish a branch office to conduct its business. A branch office is considered to be the same legal
entity as its head office, and is considered as having foreign status. Consequently, the head office can be held liable for the
liabilities and losses of its branch office in Thailand, and vice-versa.
As a branch office is considered as having foreign status, its business activities are restricted and subject to conditions and
requirements under the FBA.
2.5 Representative Office

A foreign company can establish a limited presence in Thailand by registering a representative office, which can provide a
useful stepping stone in testing the size of the Thai market before committing to establishing a registered company.
In Thailand, the function of a representative office is to liaise with and provide information and assistance to its head office
offshore. In particular, the representative office is expected to serve a support function only and, therefore:
• It must not generate income as a result of its activities in Thailand and all expenses are subsidised by its head
office; and
• It is not allowed to take any purchase order or offer or negotiate any business with any person.
Activities that a representative office is permitted to engage in are as follows:
MAYER BROWN JSM 13

04. Business Vehicles
• Searching for local sources of goods or services in Thailand for the head office or affiliated companies or
subsidiaries;
• Checking and controlling the quality and quantity of goods purchased or contracted to be manufactured in
Thailand by its head office or affiliated companies or subsidiaries;
• Giving advice relating to goods of its head office or affiliated companies or subsidiaries, which are sold to agents
or end users in Thailand;
• Disseminating information regarding the new products or services of its head office or affiliated companies or
subsidiaries; and
• Reporting on business movements in Thailand to its head office or affiliated companies or subsidiaries.
A representative office is considered a service business under List 3 of the FBA and therefore, a foreign business licence must
be obtained from the MOC.
2.6 Regional Office

A foreign entity incorporated under foreign law may establish its regional office in Thailand to carry out business activities
on behalf of its head office in providing the services only to the branches or affiliates or companies in the same group, which
are located in Thailand or the Asia region, provided that the regional office in Thailand: (i) cannot generate any income in
providing such services, and all costs and expenses of the regional office are subsidised by its head office; and (ii) cannot take
any purchase orders or make any offer or discuss or negotiate any business with any individual or juristic entities.
In particular, a regional office in Thailand can engage in only seven business activities as follows:
• Communicating, coordinating and supervising the operation of the branches and affiliates located in the region,
on behalf of the head office;
• Consultation and management;
• Training and personnel development;
• Financial management;
• Marketing control and sales promotion planning;
• Product development; and
• Research and development.
A regional office is considered a “service business” under the List 3 of the FBA and therefore, a foreign business licence must
be obtained from the MOC.
2.7 Joint Ventures

A joint venture is one of the most popular vehicles for foreign investment in Thailand. However, it has no defined legal status,
rights or duties under the Thai Civil and Commercial Code.
• Incorporated joint ventures – Joint ventures generally take the form of a partnership or company organised and
incorporated under the Civil and Commercial Code. For foreign investors, a joint venture in the form of a private
limited company is often the most appropriate vehicle.
• Unincorporated joint ventures – An unincorporated joint venture can be established in the form of an ordinary
partnership or a contractual joint venture. These arrangements create a contractual relationship between
the parties but do not establish a separate legal entity. The Revenue Department does, however, consider an
unincorporated joint venture to be a tax entity, with a duty to pay taxes and fulfil obligations analogous to an
ordinary partnership. u

Chapter 05
Real Estate
3.1 Acquisition of Land and Condominiums

• Land – Under the Land Code B.E. 2497 (1954), generally foreigners, whether individual or juristic person, are not
allowed to own land in Thailand. A foreigner includes:
»» an individual foreigner;
»» a company which is not incorporated and registered in Thailand;
»» a company which is registered and incorporated in Thailand but has its shares held by foreigners in an
amount equal to 50 percent or more of all its issued shares; and
»» a company which is registered and incorporated in Thailand but which has a greater number of foreign
shareholders than Thai shareholders.
A notable exception from the prohibition to own land is provided to foreigners bringing in not less than THB
40 million from abroad to invest in the prescribed businesses in Thailand to own up to 1 Rai of land (equal to
1,600 square metres) for residential purposes by obtaining permission from the Minister of Interior. In addition,
foreigners granted BOI promotional privileges can be permitted to own land for operation of the promoted
activities and the foreigners may be permitted to purchase and own land in an industrial estate, subject to
compliance with certain conditions prescribed by the IEAT.
• Condominium Ownership – Under the Condominium Act B.E. 2522 (1979), foreigners can own up to 49 percent
of the total area of all units in a condominium, provided that for payment of the condominium unit foreigners
bring foreign currency into Thailand or withdraw the money from a non-resident Thai THB account or a foreign
currency bank account. Evidence of the fund remittance from abroad or of the withdrawal of the money
from a non-resident Thai THB account or a foreign currency bank account is required to be presented to the
competent Land Office upon the title transfer registration.
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05. Real Estate
3.2 Zoning and Planning

Zoning and planning law should also be taken into consideration in the initial stages of construction of a project. The City
Planning Act and relevant regulations determine the zoning restrictions for areas for different purposes such as residential
areas, areas reserved for forestry and recreation, industrial areas, etc. Some types of construction are prohibited in specific
zoning areas, for example, the construction of factories is prohibited in residential areas and high rise buildings are prohibited
in reserved forestry areas, etc. This is, however, dependent on the specific regulations governing each area.
In addition to zoning and city planning laws, there are also environmental laws which are applicable in some areas, such as the
coastal provinces of Phang Nga and Phuket, in order to preserve the nation’s natural resources. Some types of construction
activity are also restricted in preserved areas. Hotels cannot, for example, be bigger than 79 rooms in certain preserved areas.
Such limitations and requirements are, however, dependent on the specific regulations governing each area.
There are many specific conditions of and variations in regulations governing each area and it is therefore recommended that
a legal professional is consulted on the regulations which are applicable in each specific area, on a case by case basis.
3.3 Building and Construction

There is no law specifically prohibiting foreigners from owning buildings or structures on land in Thailand.
The construction of any building or premises in Thailand requires permission to be obtained from the local competent
authority such as the Bangkok Municipal Authority or the office of the Local Administration of each sub-district (the Or.Bor.
Tor.).
In addition, the designs, plans, and the construction of each building are required to comply with the Building Control Act and
other relevant laws and regulations including, for example, those specifying setback distances, fire alarm and fire extinguishing
systems, and parking spaces. Various regulations apply, depending on the specific type of building and the location of the site.
3.4 Lease of Immovable Property

Foreigners are legitimately permitted to lease immovable property (e.g. land and buildings) in Thailand for a maximum period
of 30 years according to the Thai Civil and Commercial Code. A land lease must be made in writing to be valid and enforceable
under Thai laws. In the case of land leases of more than three years in duration, such leases must also be registered with the
competent Land Office, otherwise they will be enforceable for only three years. In addition, a lease agreement is required to
be affixed with proper stamp duty according to the Thai Revenue Code.
For leases of immovable property for industrial and commercial purposes, Thailand has enacted the Act on Lease of
Immovable Property for Industrial and Commercial Purpose B.E. 2542, which prescribes different criteria and conditions from
those of a normal lease under the Thai Civil and Commercial Code. The Act is applicable only to the leasing of immovable
property for industrial and commercial purposes, for which foreigners are permitted to lease land for a period of 30-50 years.
3.5 Real Estate Project Developments

• Hotels – A hotel, under the Hotel Act, is a business that rents temporary accommodation to any person for a
consideration and where the duration of the rental is less than one month.
Hotel operations require a specific hotel operation licence to be obtained. The hotel owner or hotel operator
is required to apply for such licence from the hotel registrar which is the Ministry of Interior in Bangkok or the
local district offices for hotels located in other provinces.
In addition to the requirements under the Building Control Act, hotel operators must also comply with the

requirements of the Hotel Act, such as those relating to the size of the hotel room, specific zoning rules for hotel
locations and hotel facilities, etc.
• Condominiums – A condominium is a building where ownership is separated into units and where there is
co-ownership of common areas such as elevators, swimming pools, car parks, lobbies etc. Co-ownership is
however, different for each condominium.
The construction of a condominium is subject to the requirements of the Building Control Act, the
Condominium Act, the City Planning Act, and other relevant laws and regulations.
There are many requirements and regulations in relation to the construction and operation of a condominium
and these vary depending on the location and size of the condominium and other relevant matters.
After the construction of a condominium is completed, it must be registered with the relevant Land Office. The
Land Office will issue separate title deeds for each condominium unit. In addition, the condominium developer
is required to register the Condominium Juristic Person (CJP), which is responsible for the management and
maintenance of the condominium, on the date of the sale of the first unit in the condominium.
The sale and purchase of condominium units is governed by the Condominium Act. The sale and purchase
agreement between a developer and a buyer is required to be prepared in accordance with the standard form
prescribed by the Act. All information which the developer includes in the advertisement for a condominium
(whether written or photographic) is deemed to form part of the sale and purchase agreement for the
condominium. u
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Chapter
Contents 06
Securities and
Exchange
4.1 Securities Offering

In expanding a business, the need for funding is inevitable. One method of raising funds is offering securities to the public.
Approval from the Securities and Exchange Commission (SEC) is required to be obtained prior to an actual public offering
being made.
The rules and regulations which apply to obtaining approval to offer securities to the public are different for each type
of security. In offering newly issued securities, the offeror must obtain approval from the SEC and disclose all relevant
information to the public.
To give investors time to review information relating to the issuer or offeror, a registration statement and a draft prospectus
must be filed with the SEC. Certain types of security offerings that do not affect the general public (e.g. those to sophisticated
institutional investors) may, however, be exempt from such requirements.
Once securities have been offered, the issuers and/or offerors must also perform a number of post-offering duties including
submitting to the SEC a securities sale report, quarterly and annual financial statements and other relevant reports, etc.
4.2 Listing
Listing a public limited company on the Stock Exchange of Thailand (SET) provides a long-term source of funds for the
company. Being subject to a higher standard of governance, a listed company benefits from a positive reputation, enhanced
credit-worthiness and increased public exposure and attractiveness. A company listed on the SET may also be granted tax
privileges on dividends it may receive from certain types of companies in which it holds shares.
Securities which may be listed include:
• Common shares;
• Preferred shares;

• Debentures;
• Convertible debentures;
• Warrants;
• Investment units, such as property funds;
• Other securities to be announced by the SEC from time to time.
There are different criteria and qualifications for each type of security. For example, applicants wishing to list common shares
must, among other things, have a minimum paid-up capital of THB 300 million, have at least 1,000 shareholders and must have
been in operation for not less than three years.
After filing a listing application to the SET, the SET will visit the company and interview the management. The company will
then distribute shares to the public and, after two business days following the date on which the SET panel approves the listing
of the securities, trading on the exchange may begin.
4.3 Takeover
A takeover is where a person seeks control of a public listed company through the acquisition of shares or by tender offer. The
rules promulgated under the Securities and Exchange Act B.E. 1992 (SE Act) prescribe four types of tender offer, as follows:
• Mandatory tender offer;

• Voluntary tender offer;
• Partial tender offer;
• Tender offer for delisting.
The principal objectives of the takeover regulations are to provide protection to both the shareholders and the business, to
create a fair exit for all shareholders and to promote business efficiency following a takeover.
In support of the above concept, the tender offer rules require that once a person’s voting rights reach a specified trigger
point, such person must make a mandatory tender offer. The trigger points are:
• 25 percent of all voting rights;

• 50 percent of all voting rights;
• 75 percent of all voting rights.
In calculating a person’s total shareholding, the securities of connected persons and of any persons/entities acting in concert
with him are taken into account.
For six months following a tender offer, the offeror may not acquire any securities of the business at a higher price or on
better terms than those presented in the tender offer. Furthermore, for one year after the tender offer, the offeror may not
do anything which deviates significantly from the terms specified under the tender offer statement unless 75 percent of
shareholders’ approval is granted and notification to the SEC is made.
In order to encourage capital market liquidity, the SEC also provides a number of exemptions and waivers in respect of tender
offer requirements. For example, a person with no intention of controlling a business but who acquires securities through the
Thai Trust Fund or non-voting depository receipt (NVDR) will be granted an exemption by the SEC. Waivers are also available
where certain conditions of the SEC are satisfied.
The takeover process also requires a financial advisor to be a joint applicant to the SEC.
MAYER BROWN JSM 19

06. Securities and Exchange
4.4 Corporate Governance and Fiduciary Duties of Directors and Executives

In order to promote transparency and confidence from the public in both listed companies and the SET, the SEC and SET have
issued policies and drawn up guidelines regarding good corporate governance.
Primarily focusing on the rights of shareholders, such policies and guidelines are intended to provide transparency and, in
turn, gain the confidence of investors and the general public.
The SE Act prescribes fiduciary duties for the directors and executives of listed companies which can be divided as follows:
• Duty of care – making decisions without conflict of interest, with honest beliefs and reasonable grounds in the
best interests of the company and in reliance on information honestly believed sufficient;
• Duty of loyalty – acting in good faith in the best interests of the company, acting with proper purpose and not
acting in significant conflict with the interests of the company; and
• Duty to comply with the law.
4.5 Thailand Futures Exchange

The Thailand Futures Exchange plc (TFEX) was established in 2004 for exchanging and trading derivatives products under the
Derivatives Act, B.E. 2546 (2003) (the Derivatives Act). The TFEX operates under the supervision of the SEC. Currently the
Derivatives Act allows trading of futures, options, and options on futures, i.e. SET50 Index Futures, SET50 Index Options, and
Single Stock Futures on certain active shares listed on the SET, Gold Futures and Interest Rate Futures. u

Chapter 07
Taxation
The principal taxation law of Thailand is the Revenue Code. The main forms of taxation are income tax, value added tax (VAT),
specific business tax, and stamp duty. There are also other specific revenue-collecting statutes imposing tax, such as customs
and excise taxes, property tax, etc.
5.1 Personal Income Tax

Residents and non-residents are subject to personal income tax which is collected on almost all types of income received from
(i) a position or office held in Thailand; (ii) business carried out in Thailand; (iii) business of an employer in Thailand; and (iv)
property located in Thailand, regardless of whether such income is paid in or outside of Thailand.
Certain types of income are excluded from tax, including allowances for work-related travel or relocation, interest on savings
with the BOT, inheritance and scholarships. The income earner is entitled to deduct expenses and allowances in order to
relieve the tax burden in accordance with conditions and rates specified in the Revenue Code.
• Resident – A resident is defined under the Revenue Code to be a person residing in Thailand for a period of
180 days or more in any one calendar year even though he or she may be a foreigner and may not be staying in
Thailand under an immigrant visa. A resident will have a tax liability for income received in Thailand referred to
above and for certain income which is received abroad and transferred into Thailand.
• Non-resident – A non-resident is a Thai or a foreigner who resides in Thailand for a period of less than 180 days in
any one calendar year. Their tax liability is limited to the income received from employment or business carried
out or assets located in Thailand.
• Current rates of taxation – Personal income tax is calculated on a sliding scale from 5 percent to 37 percent of
the assessable income, after deduction of standard expenses and allowances.
MAYER BROWN JSM 21

07. Taxation
5.2 Juristic Income Tax

Corporate income tax applies to companies and juristic partnerships that are registered under Thai law or carry on business in
Thailand. It also applies to members of unincorporated joint ventures, registered partnerships, foundations and associations
engaged in business activities. The general principle of income tax on juristic persons is based on the collection of tax on net
profits arising from or as a consequence of the business carried out within an accounting period.
a. Corporate Tax-Payers:
1. Local companies and partnerships – Juristic companies and partnerships organised under Thai law pay income
tax on all profits derived from domestic as well as foreign business operations. If a company does not carry out
any business in Thailand but has all its activities in a foreign country, it is still required to pay income tax on the
profit derived abroad. However, a tax credit may be allowed under an applicable treaty for avoidance of double
taxation.
2. Foreign companies and partnerships – Foreign companies and partnerships (a) carrying out business in
Thailand; or (b) which have an employee, a representative or a go-between in Thailand for the purposes of
carrying out business are subject to juristic income tax. Foreign juristic companies and partnerships which carry
out business in various countries including Thailand pay tax under Thai law only on the net profit arising from
or in consequence of the business carried out in Thailand. Foreign companies or partnerships not carrying out
business in Thailand but which receive assessable income, as specified by the Revenue Code, paid either from or
in Thailand, are subject to withholding tax at the rate specified by the Revenue Code, which is currently between
10 and 15 percent. Dividends paid to foreign companies are generally subject to 10 percent withholding tax.
3. Unincorporated joint ventures – The Revenue Department recognises the unincorporated joint venture as a tax
entity and prescribes that partners of the joint venture must share in the profit and loss of the joint venture as
a limited company or partnership set up either under Thai law or foreign law. Such legal vehicles will be taxed in
the manner described above.
b. Current Rates of Taxation:

Juristic income tax is calculated on the net profit of the company or partnership for the tax year. Generally the juristic income
tax rate is 30 percent. However, currently (as per the government’s policy), the tax rates are 10 percent, 15 percent and 20
percent, depending on the types and business of the entities according to the Revenue Department’s regulations, which may
be subject to change from time to time. The tax year can be any 12-month period, as selected by the Company. Net profits
are ascertained according to the conditions contained in the Revenue Code. Normally, all income accrued in any accounting
period, whether received or not, is included as taxable income after expenses have been deducted in accordance with the
Revenue Department’s regulations.
5.3 Value Added Tax

VAT is charged on every purchase of goods or services. However, certain types of business are exempt from paying such tax.
1. Persons liable to pay VAT:

• Business operators selling goods or providing services having income exceeding THB 1,800,000 per
annum;
• Business operators who are VAT registrants;
• Persons who import or bring goods into Thailand.

2. Current rates of VAT:
The current tax rate of VAT is 7 percent. Certain business operators are subject to a zero percent VAT rate but
are still required to file tax returns and are eligible to claim input tax, if qualified. A tax rate of zero percent applies
to the following transactions:
• Export of goods;
• Provision of services performed in Thailand but used in a foreign country;
• Provision of international transport services by aircraft or sea-going vessels by a juristic person;
• Sale of goods and provision of services to a government entity; and
• Sale of goods or services between bonded warehouses or between the operators in free zone.
3. Business activities exempt from VAT include:

• Sale of goods or provision of services where income of the operator does not exceed THB 1,800,000 per
annum;
• Sale of certain agricultural products and animal products;
• Provision of employment, local transportation, education services and professional services such as
medical services, accounting, etc.;
• Import of certain goods such as agricultural and animal products, products to be forwarded to industrial
export zones and products which are exempt from import tariffs under customs tariff law;
• Lease of immovable property.
5.4 Specific Business Tax

Specific business tax (SBT) is charged on certain types of business as specified in the Revenue Code, such as banking,
securities, insurance, real estate, etc. Specific business tax is charged at a rate of between 2.5 and 3 percent of the gross
receipts, depending on the category of the business.
5.5 Withholding of Income Tax

Income tax must be withheld at source by a corporate or individual payer from assessable income or from employees’ wages.
Assessable income tax includes payment for services, patents, value for good will, dividends, interest, rental fees, etc.
5.6 Stamp Duty

Stamp duty is imposed on instruments as specified in the Stamp Duty Schedule of the Revenue Code. There are currently 28
kinds of instruments subject to stamp duty. Rates of stamp duty vary depending on the type of instrument.
5.7 Excise Tax

Excise tax is generally levied on luxury goods (including petrol and cars), certain goods which may affect health (such as
cigarettes, and liquor), and also certain services such as those provided by golf course or racetrack operators.
5.8 Customs Tax

Customs tax is generally levied on imported and exported goods.
MAYER BROWN JSM 23

07. Taxation
5.9 Municipal Tax

Businesses that are subject to SBT must also pay 10 percent municipal tax. For businesses that pay VAT rather than SBT, the
municipal tax (at the rate of one-ninth of the VAT) is duly included in the standard 7 percent VAT rate.
5.10 Petroleum Income Tax

Income derived from petroleum operations is not subject to Revenue Code but it is subject to the Petroleum Income Tax Act,
B.E. 2514 (1971). Income derived from petroleum operations includes revenues from the production, transportation, or sale of
oil and gas, as well as the proceeds of a transfer of interest in a concession, and royalties, both in cash and in kind. Production
royalties paid to the government for all petroleum products, including natural gas, are allowed to be used as tax deductibles.
Cost of property improvements, surface reservation fees, and royalty surcharges imposed under the Petroleum Income Act
due to late or insufficient payment of royalties or a failure to cooperate with officials at the Petroleum Authority of Thailand
are not permitted as tax deductibles. The tax rate for most petroleum operations is 50 percent of net profits.
5.11 Signboard Tax

Signboard tax is imposed annually at various rates between THB 3 to THB 40 per 500 square centimetres (depending on
the language) on signs or billboards that display a name, trademark, or product for the purpose of advertising or providing
information about businesses.
5.12 Property and Land Taxes

Owners of land or buildings may be subject to annual taxes under the House and Land Tax Act at 12.5 percent of the annual
value of land with buildings where “annual value” means the annual rent or, if the property is not leased out, the amount that
the owner should have received that year if the property had been leased out.
5.13 Tax Treaties

At present, Thailand has entered into treaties for the avoidance of double taxation with 56 countries, which, to a greater
or lesser degree, relieve the tax burden for persons wishing to remit income abroad. The countries that have a double tax
treaty with Thailand are Armenia, Australia, Austria, Bahrain, Bangladesh, Belgium, Bulgaria, Canada, Cyprus, Czech Republic,
Denmark, Finland, France, Germany, Hong Kong SAR, Hungary, India, Indonesia, Islamic Republic of Pakistan, Israel, Italy, Japan,
Kuwait, Laos, Luxembourg, Malaysia, Mauritius, Nepal, New Zealand, Norway, Oman, People’s Republic of China, Poland,
Romania, Singapore, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Seychelles, Turkey, the Netherlands, the
Philippines, the Republic of Korea, the UAE, the UK, the USA, Ukraine, Uzbekistan, and Vietnam. The provisions may reduce,
exempt or allow credit or deduction of income tax paid in the respective jurisdictions.
5.14 Tax Administration and Compliance

The tax system is administered by the Revenue Department of the Ministry of Finance, which issues tax returns and conducts
assessments based on the information filed. The due dates for the payment of taxes are as follows:
• Personal income tax is due in March of every year;

• Corporate income tax is due within 150 days from the last date of the accounting period; and
• VAT and specific business tax is due by the 15th of the month following the receipt of the relevant payment. u

Chapter 08
Labour
6.1 Labour Protection

Basic rights for employers and employees are regulated in the Civil and Commercial Code as well as the Labour Protection
Act B.E. 2541 (1998), which is the main legislation that prescribes protection for employees. Labour protection available under
Thai law can be summarised as follows:
• Working hours, wages and holidays – Working hours and holidays vary depending on the nature of the work;
however, the maximum working hours should not exceed eight hours per day or 48 hours per week. In addition,
there must be a minimum of 13 public holidays per year, including National Labour Day (1 May).
• Sick leave – Every employee is entitled to sick leave for as long as the sickness lasts. The employer must pay the
fixed wage to the employee for the first 30 working days of his/her illness in any one year.
• Worker’s compensation – An employee is entitled to worker’s compensation if he or she suffers injury, sickness
or death in the course of work. Worker’s compensation is calculated based on the severity of the disability.
• Worker Compensation Fund – Under the Worker Compensation Act B.E. 2537 (1994), every employer must
make a contribution to the Worker Compensation Fund. The contributions are assessed on the total wages paid
and the type of business, with a rate not exceeding 5 percent of the total wages paid by the company.
• Maternity leave – Female employees are entitled to maternity leave for a maximum period of 90 days and are
entitled to ordinary wages for 45 days during such leave.
• Termination of employment – Under the Labour Protection Act B.E. 2551 (2009), if an employer wishes to
dismiss an employee whose employment term is not specified, such employer is required to give advance notice
of the dismissal or make a payment in lieu of advance notice. If the ground for termination does not fall under
those set out in the Labour Protection Act, the employee is entitled to severance payment at a rate ranging from
30-300 working days’ wages, depending on the period of employment.
• Employee associations and labour unions – Employee associations and labour unions can be established and
MAYER BROWN JSM 25

08. Labour
registered with the Ministry of Labour and Social Welfare in order to deal with employers regarding disputes in
relation to employment, on behalf of the employees.
• Labour court – Specialised labour courts have the authority to decide any dispute concerning labour protection
law, labour relations law and employment contracts.
• Work rules – An employer with at least 10 employees is required to establish written work rules covering work
performance and such things as working days, holidays and disciplinary actions. Such work rules must be
written in Thai and displayed for employees in the work place. Furthermore, the employer is required to submit
a copy of the rules to the Director-General of the Department of Labour Protection and Welfare or the relevant
district office having jurisdiction over the employer.
• Social Security Fund – Pursuant to the Social Security Act B.E. 2533 (1990), every employer is obliged to register
with the Social Security Fund. Under the Social Security Act, the government, the employer and the employee
jointly contribute to the Social Security Fund every time wages are paid. The rate of contribution is currently
3 percent of an employee’s income but it is subject to change from time to time by Ministerial Regulations.
The maximum contribution of each employee is THB 750 per month. An employee who is a member of the
Social Security Fund is entitled to receive compensation benefits in non work-related cases such as illness,
disablement, death, child welfare, childbirth and unemployment as well as old-age benefits.
6.2 Work Permits

A foreigner wishing to work in Thailand must obtain a work permit by submitting an application to the Department of
Employment of the Ministry of Labour. A foreigner applying for a work permit must already either be permitted to stay
temporarily in Thailand (non-immigrant visa) or have residence in Thailand according to the Immigration Act B.E. 2522 (1979).
There are a number of criteria that the Department of Employment takes into consideration before granting a work permit,
e.g. the employer’s financial status, the number of the Thai employees hired by the employer and the gross income of the
applicant. At present, to obtain a work permit, the minimum paid-up registered capital of a Thai company employer must be
THB 2 million per one foreign employee and the employer must have four Thai employees per one foreign employee. These
criteria are subject to change from time to time.
A foreigner wishing to continue working in Thailand has to resubmit an application form and evidence must be produced of
compliance with the conditions stipulated in his/her work permit, before the permit’s expiry date. u

Chapter 09
Intellectual Property
As a member of the World Trade Organisation (WTO), Thailand recognises several broad categories of intellectual property
rights including: copyright, patents, trade marks and layout designs of integrated circuits. Thai law also protects certain
confidential information under the Trade Secrets Act B.E. 2545 (2002), although this information is not strictly regarded as
intellectual property.
7.1 Copyright
The author of a copyright work, irrespective of the mode or form of its expression, is automatically protected from the
date of the creation of such work under the Copyright Act B.E. 2537 (1994). As a signatory to the Berne Convention and the
Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), Thailand is obliged to protect the copyright of
authors belonging to other signatory nations.
Although there is no requirement for registration, it is recommended that the owner of a copyright should notify the
Department of Intellectual Property of their copyright in a work. This acts as the best evidence to prove their rights over the
copyright work if there is a legal dispute about its ownership. Such notification does not, however, provide any right in itself.
The owner of the copyright has exclusive rights of reproduction or adaptation, assignment and communication to the public.
The term of copyright protection exists during the lifetime of the author and continues to exist for 50 years after the death of
the author.
The owner of the copyright may license or assign their exclusive rights in the copyright work to any person. Such licensing
or assigning must be made in writing but is not required to be registered with the Copyright Division of the Department of
Intellectual Property. However, it is advisable to notify the Department in respect of licensing and assigning.
MAYER BROWN JSM 27

09. Intellectual Property
7. 2 Patents
Patents are protected under the Patent Act B.E. 2522 (1979). There are three kinds of patents which are protected under the
Patent Act, namely: invention patent, design patent and petty patent. To enjoy protection, the owner of the patent must apply
for registration.
• Invention patent – For an invention to qualify for an invention patent, it must be a new invention, have an
innovative step and be applicable for industry. The invention patent is valid for 20 years from the date of filing
and it cannot be renewed.
The patentee or applicant has the right to use the patent process to produce, use, offer for sale and import
products made using the patented process into Thailand.
• Design patent – For a design product to qualify for a design patent, it must be a new industrial or handicraft
design. The design patent is valid for 10 years from the date of filing the patent in Thailand. Design patents
cannot be renewed.
The patentee has the exclusive right to use the design patent, offer the design patent for sale, or import
products made using the design patent into Thailand, unless the design patent is used for education or research
purposes.
• Petty patent – For an invention to qualify for a petty patent it must be a new invention and be applicable for
industry. The petty patent is valid for six years from the date of filing for a petty patent in Thailand. The petty
patentee may apply for renewal of the petty patent twice for an extension period of two years.
The patentee of a patent, design patent or petty patent registered in Thailand is entitled to license or assign
its patent to any person. Such licensing and assigning must be made in writing and registered with the Patent
Examiner of the Department of Intellectual Property.
7.3 Trademarks and Service Marks

The owner of the trademark is protected under the Trademark Act B.E. 2534 (1991). The applicant enjoys the right to apply for
shape or configuration of products, text and colour combination as a trademark or service mark. The Act defines a trademark
as a symbol used or proposed to be used on or in connection with goods to distinguish the goods from goods of another
person. The definition of trademark applies to service marks, certification marks and collective marks (mark).
To enjoy protection, the owner of the trademark/service mark must apply for registration with the Trademark Registrar. The
registered mark is valid for 10 years from the date of application and can be renewed. Before filing a trademark application, a
trademark search should be carried out to establish whether there are similar or identical trademark applications which have
been filed or registered prior to the current application. The owner of the registered mark has an exclusive right to use its mark
or grant a licence to other persons to use the mark or assign it to a third party. Such licensing and assigning must be made in
writing and be registered with the Trademark Registrar. An owner may initiate legal action against a party who counterfeits or
imitates the registered mark, or uses it without permission. Violators may be also liable for a variety of criminal offences.
The owner of an unregistered mark is entitled to bring legal action against a party who deceives consumers by falsely causing
them to believe that a product was manufactured by the owner of the unregistered mark.
7.4 Layout-Designs of Integrated Circuits

The owner of a layout-design is protected under the Protection of Layout-Designs of Integrated Circuits Act B.E. 2543 (2000),
upon registration and issuance of a layout-design certificate. The Act defines the layout-design as any pattern, layout or image,
however it appears, in any form or method, made for the purpose of displaying an integrated circuit.

The layout-design must be registered in order to be protected. The protection of the layout-design is valid for 10 years from
the date of filing the application for registration or the date of commercial exploitation (whichever is the earlier), whether
within or outside Thailand. The layout-design must be registered within two years of the date of commercial exploitation. If
the layout-design has neither been registered nor exploited within 15 years of its creation, it will not be eligible for registration
in Thailand.
The layout-design designer has the exclusive right to reproduce the layout-design protected under the Act and to import,
sell or distribute by any means for commercial purposes. The designer may grant a licence or assign their layout-design
rights. Such licensing and assigning must be made in writing and be registered with the Director General of Department of
Intellectual Property.
7.5 Trade Secrets

Trade information (including the method or process of producing information, price list information, client database, etc.)
is of significant commercial value and the owner of such information (“Trade Secret”) will wish to keep this information as
secret as possible for the protection of their business.
The Trade Secret Act B.E. 2545 (2002) defines the term “trade secret” as meaning trade information which is not, as body or in
the precise configuration and assembly of its components, generally known among or readily accessible to persons within the
circles that normally deal with the kind of information in question.
Moreover such trade information must have commercial value because it is secret and has been subject to reasonable steps,
by the person lawfully in control of the information, to keep it secret.
The owner of a Trade Secret (whether natural or juristic person) may prevent information lawfully within their control from
being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices.
In addition the owner of a Trade Secret may assign their rights to the Trade Secret to another person by written contract and
such Trade Secret can be inherited by an heir of the owner.
The owner of the Trade Secret is entitled to claim against a person who commits an offence by bringing a case to the IP&IT
Court, within three years from the date of the wrongful act and the identity of the person committing the offence becoming
known to the owner, or before 10 years from the day when the wrongful act was committed. The IP&IT Court may order the
defendant to pay an indemnity and, possibly, an amount equal to the profit that was made as a result of using the Trade Secret,
to the owner of the Trade Secret. In addition, the owner of the Trade Secret is entitled to solicit the IP&IT Court to issue an
injunction to order the wrongdoer to cease performing the wrongful act.
Any act against the Trade Secret of another person will be deemed not to be an infringement of the Trade Secret if the Trade
Secret has been:
• Disclosed or used by a duly authorised person without knowing of an infringement;

• Disclosed or used by government agencies which keep such Trade Secret in order to:
»» protect the health and security of the public; or
»» protect the public interest without commercial purpose.
The owner of a Trade Secret enjoys the rights in the Trade Secret forever unless the Trade Secret has been disclosed. There is
no requirement for the owner of a Trade Secret to register the secret.
MAYER BROWN JSM 29

09. Intellectual Property
7.6 Protection of Geographical Indicator

The Protection of Geographical Indicator Act B.E. 2546 (the PGI Act) extends the protection of geographical indicators
through a registration system over local products named after their place of origin and which originated from specific areas or
where the reputation, characteristic and quality are recognised across the country.
The objective of the PGI Act is to prevent any public confusion concerning the quality and place of origin of a product and to
assist the consumer in distinguishing one product from another. Additionally, the PGI Act prohibits the misuse of descriptions
of products which have no connection with a geographical area.
A geographical indicator is a geographical name used on a particular product indicating the place of origin of the product
which directly causes the products to have special characteristics, quality and good reputation. The geographical indicator
may be a name, symbol or other thing called or representing a geographical source such as an area of a country, boundary,
region or locality including the sea, lake, river, waterway, island, mountain or other area of the same character. The
geographical indicator is eligible for registration with the Department of Intellectual Property if it is not a common name for
the product and is not against public order and good moral or public policy.
The manufacturers, traders or business operators of the products bearing the geographical indicator which reside at the
geographical areas, or the consumer entity using a geographical indicator can register the protection of the indicator. This
becomes effective on the date of the application.
7.7 The Intellectual Property and International Trade Court

The Intellectual Property and International Trade Court Establishment Act (the IP/IT Act) was introduced in October 1996.
The IP/IT Act sets out the framework for the Intellectual Property and International Trade Court (the IP/IT Court), which was
established on 1 December 1997.
The IP/IT Court has exclusive jurisdiction over intellectual property and international trade cases covering such subject matter
as copyrights, trademarks, patents, trade secrets, international sales, financial instruments, and international carriage of
goods, among others, and is responsible for both civil and criminal cases. u

Chapter 10
Environmental Regulations
Two major pieces of legislation govern environmental protection in Thailand, namely, the Enhancement and Conservation of
National Environmental Quality Act B.E. 2535 (1992) and the Factory Act B.E. 2535 (1992).
8.1 Enhancement and Conservation of National Environmental Quality Act

• Environmental Impact Assessment Report (EIA Report) – Depending on the size and type of a proposed
project or activity, an EIA Report may need to be prepared. An EIA Report is used to forecast and evaluate
the environmental implications of construction projects and establish appropriate mitigation measures to
ensure efficient use of natural resources for economic development. It must be prepared by a consulting
firm registered with the Office of Natural Resources and Environmental Policy and Planning (ONEP) and be
submitted to the ONEP for consideration.
The projects or activities that require a report to be submitted to the ONEP include the following: heavy
industries; residential and community building projects in areas adjacent to rivers, coastal areas, lakes, beaches
or in national parks; transportation projects; and energy and mining projects. The National Environmental
Board (NEB) has the authority to prescribe the types and sizes of projects or activities requiring the EIA Report.
The EIA Report is required to include details of the project, its environmental impact and suggestions to prevent
and remedy any damage to the environment.
As required under Section 67 of the Constitution of the Kingdom of Thailand, B.E. 2550 (2007)1, in 2009, a health
impact assessment is required to be prepared as part of the EIA Report. Under relevant Ministerial Notification,
the specified 34 types of project and activity (e.g. mining, industrial park, petrochemical, port, dam, coal-fired
1 Section 67 of the Constitution of the Kingdom of Thailand, BE 2550 (2007) provides that “Any project or activity which may seriously affect the quality
of the environment, natural resources and health diversity shall not be permitted, unless its impacts on the quality of the environment and on health of
the people in the communities have been studied and evaluated and consultation with the public and interested parties have been organized.”
MAYER BROWN JSM 31

10. Environmental Regulations
power plant, biomas power plant, combined cycle power plant, nuclear power plant, smeltery, etc.) must
prepare an EIA Report containing a health impact assessment as part thereof.
• Pollution control – Measures which the NEB can take against the possessor of a source of pollution include, for
example, requiring installation or construction of an on-site facility for air pollution control and waste water
treatment, and submission of a monthly report to various officials containing key operational data of the facility.
Pollution control officials have the power of entry to inspect and to issue orders to correct, change, improve or
repair the facilities or equipment. Failure to comply can result in a suspension of operations, the revocation of
licences or a recommendation to close a factory.
• Penalties – Any person who violates or fails to comply with requirements and measures set out under the Act
can be punished by a fine and/or imprisonment. In cases where the offender to be punished is a juristic person,
the directors, managers, or persons in charge of the business operation causing the pollution are jointly liable
and can be punished with the same penalties.
8.2 Factory Act

The Factory Act governs all provisions relating to factory construction, operation, expansion, and safety requirements and
controls industrial pollution. Large-scale industrial factories using machinery of more than five horsepower or employing
seven workers or more must have a factory licence issued by the Department of Industrial Works of the Ministry of Industry,
which closely monitors and controls factory operations.
The Minister of Industry has broad powers to establish standards and methods to control the production and release of
waste, pollution, and anything else resulting from factory operations which affects the environment.
A factory operator who violates or fails to comply with the Act is liable to punishment in the form of a fine or imprisonment
and, if the factory is a serious danger to the public, an order to cease operations can also be made. u

Chapter 11
Trade Competition
Trade competition is governed by the Trade Competition Act B.E. 2542 (1999), which applies to all business operators in
Thailand except the government sector, state enterprises, farmers and other businesses, as prescribed by the Ministerial
Regulations. The Act aims to promote free and fair trade competition and restricts any behaviour or activity which creates a
monopoly, or reduces or restricts competition.
The Trade Competition Commission (the Commission) is the principal regulatory body for the enforcement of the Act. The
main functions of the Commission are to define dominant positions, hear complaints from third parties, consider applications
for permissible practices and initiate actions against persons considered in breach of the Act. The Commission is also
empowered to take action against companies colluding to establish or maintain restrictive business practices.
There are five trade practices prohibited under the Act, described in the following sections.
9.1 Abuse of Dominant Position

In January 2007, the Commission issued a notification prescribing the following criteria for identifying dominant business
operators in a market:
• A business operator with a market share of 50 percent or more and a sales volume of THB 1 billion or more in the
previous year; or
• One of the top three business operators with a combined market share of 75 percent or more and a combined
sales volume of THB 1 billion or more (unless one of them had a market share of less than 10 percent or a sales
volume of less than THB 1 billion in the previous year).
Market dominant business operators are prohibited from taking certain actions which would result in abuse of their dominant
positions, such as unfair pricing, limiting production, attaching compulsory conditions to purchases, etc.
MAYER BROWN JSM 33

Trade Competition
9.2 Merger Arrangement Possibly Creating Unfair Competition

There is legitimate concern that a merger or acquisition of a business may create a monopoly or result in unfair competition in
the market. Where this is likely to occur, the merger or acquisition will be prohibited unless prior permission is obtained from
the Commission. A notification specifying the conditions that trigger the prohibition is yet to be issued by the Commission.
9.3 Anti-competition Co-arrangement

The Act prohibits business operators from colluding with each other or jointly conducting certain activities which create a
monopoly or limit competition in the market.
9.4 Preventing the Purchase of Goods or Services Directly from Overseas

The Act restricts any business operator from taking any action with an overseas business operator with which it has a business
relationship by way of contract, policy, partnership, shareholding or otherwise in order to prevent customers from buying
goods or services directly from the overseas business operator.
9.5 Unfair Competitive Actions Causing Damage to

Other Business Operators
Business operators are prohibited from taking any action which prevents free and fair competition and which causes
destruction, damage, obstruction, impediment or restriction to another’s business operation.
In addition, the Commission issued a regulation in 2006 providing guidelines for determining which business practices could
constitute unfair competition, specifically in relation to the trade practices between modern traders and their suppliers.
These guidelines set out the conditions regarding price-setting, receipt of economic benefits, return of goods, consignment
sales contracts, conditions to purchase, assignment of work to employees of suppliers, and refusal to receive specifically
ordered goods for which trading was between modern traders and suppliers.
A breach of provisions of the Act can result in a maximum fine of THB 6 million and three years imprisonment. Sanctions may
be imposed against responsible officers or representatives of a company. u

Chapter 12
Insolvency and Liquidation
10.1 Voluntary Liquidation

In general, a company incorporated in Thailand can initiate a voluntary liquidation by a board of directors resolution and a
shareholders’ meeting approving the liquidation and at which a liquidator and auditor are appointed. The appointed liquidator
must publish the company’s decision to liquidate in a local newspaper to allow creditors to submit payment claims.
The liquidator will prepare a balance sheet to be examined and certified by the auditor and approved by a shareholders’
meeting.
During the liquidation, the liquidator must file a report with the MOC on the progress of the liquidation every three months.
Once the liquidation is completed, the liquidator will summon a shareholders’ meeting to approve the liquidation accounts
and file an application to register the company’s completed liquidation.
The MOC will not declare the dissolution complete until the Revenue Department has confirmed that all tax liabilities of the
company have been settled.
Procedures for voluntary liquidation will differ depending on whether the company is a private limited company or a public
limited company.
10.2 Bankruptcy
This involuntary liquidation occurs when an individual or company is insolvent and creditors file a bankruptcy petition for the
purpose of distributing the debtor’s assets.
• Requirements – Only a creditor is entitled to file a bankruptcy petition against a debtor. A creditor may file a
bankruptcy petition against a debtor when the debtor is insolvent, indebted to the petitioning creditor (or to
several creditors) in an amount not less than THB 2 million for a company or THB 1 million for an individual and
such debt is a liquidated amount, irrespective of whether it is due immediately or will become due in the future.
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Insolvency and Liquidation
• Process – After the court grants an order for receivership, control of the company passes to the Official
Receiver, who must call a creditors’ meeting to consider any proposals for the composition of the debtor’s
liabilities. The creditors can pass a special resolution accepting the debtor’s proposal for the composition of
debts. If the proposal is rejected, or if no proposal is made, the court must adjudge the Company bankrupt
and the Official Receiver will be empowered to manage and liquidate the assets for distribution amongst all
creditors.
After the granting of a receivership order, the Official Receiver is permitted to sell the debtor’s assets. The
debtor is prevented from doing any act involving the debtor’s business or assets without the consent of the
Official Receiver, the court or the meeting of creditors.
The liquidator is always the Official Receiver. Creditors must submit their claims for repayment to the Official
Receiver within two months from the date of the publication of the absolute receivership order. Creditors failing
to do so within such time will be excluded from the bankruptcy process. However, if the creditor is outside
Thailand, the Official Receiver may extend the time prescribed by no more than two months.
The Official Receiver will request the court to close the bankruptcy after the final distribution of the bankrupt’s
assets. The order of closure suspends the bankruptcy and the case may be re-opened in certain circumstances.
After closure, the bankruptcy can be formally terminated upon application by an interested party.
Apart from bankruptcy closure, a bankrupt individual may be discharged from bankruptcy status upon the
expiry of three years from the date of the bankruptcy order. A bankrupt company may only be discharged from
bankruptcy status in certain circumstances.
10.3 Reorganisation
Reorganisation is a method to maintain and restore a company’s viability. The key issues include:
• Requirements – The debtor, its creditors and government agencies which have the power and duty to supervise
a debtor’s business are entitled to file a petition for business reorganisation. To commence a reorganisation,
creditors must hold claims against a debtor in an amount of not less than THB 10 million on the basis that the
debtor is not insolvent and there is reason to believe that the debtor can be successfully rehabilitated.
• Process – The process of court-supervised business reorganisation is summarised as follows:
»» A creditor or debtor petitions for reorganisation.
»» The court rules on the petition and appoints the planner, who must prepare a reorganisation plan and run
the debtor’s business pending the plan’s approval.
»» The creditors vote on the plan; if accepted, the plan is submitted to the court for approval.
»» If the plan is approved by the court, it becomes operative and the plan administrator is appointed to
implement the approved reorganisation plan.
»» Implementation of the plan may proceed under the court’s supervision for up to a maximum of seven years,
depending upon the terms of the plan.
• Debt repayment – Creditors must submit their claims within one month of the order appointing the planner
being published in the government gazette. Any creditors that do not submit a claim will be excluded from the
reorganisation process.
• Automatic stay – After a business reorganisation petition is accepted, an automatic stay applies and prevents
creditors from taking action against the debtor. It also restricts the debtor from taking certain actions such as
creating obligation against its property or repaying or creating a debt.

• Exit from reorganisation – Upon completion of the reorganisation plan, the reorganisation will be formally
concluded and the debtor’s manager, the plan administrator or the Official Receiver will then apply to the court
and request an order to cancel the reorganisation. After the cancellation order is issued, management control
will be restored to the former management.
10.4 Competent Court

Established in 1999, a specialist bankruptcy court has exclusive jurisdiction over bankruptcy and reorganisation cases and has
powers to regulate its own procedures. u
MAYER BROWN JSM 37

Chapter 13
Dispute Resolution
11.1 Litigation
a. Courts of Justice in Thailand
The Thai judiciary has a three-tier system with the Supreme Court being the court of final appeal, followed by the
Appeal Courts and the Courts of First Instance.
Appeals against Court of First Instance judgments are required to be filed with the Court of Appeals, subject to
certain restrictions. The Supreme Court has jurisdiction over cases appealed from the Court of Appeal.
The Courts of First Instance consist of the Civil Courts, the Criminal Courts, the Dusit Provincial Court, the Taling
Chan Provincial Court, the Prakanong Provincial Court and the Minburi Provincial Court, all of which are situated in
Bangkok. Each has civil or criminal jurisdiction.
As part of the 1997 Constitution, the Administrative Court was established, which has jurisdiction over disputes
among government agencies and state enterprises, as well as between officials of those agencies and their
employers. The Administrative Court is also responsible for administrative contracts entered into by the state and
the private sector.
In addition to the courts mentioned above, there are five types of specialised courts. These are the Juvenile and
Family Courts, the Labour Court, the Tax Court, the Intellectual Property and International Trade Court, and the
Bankruptcy Court which have jurisdiction in their respective areas. An appeal against a judgment of a specialised
court will normally be lodged to the Supreme Court directly.

b. Commencement of Civil Procedure
To commence a contested action, a plaintiff is required to file a claim in the appropriate court, depending on the
nature of the claim and the residence of the defendant or the cause of action.
In uncontested cases, a petitioner proceeds by lodging a petition or motion to request a declarative judgment or
an order over his particular right or state of affairs. The petition is normally made public by an advertisement in the
newspapers allowing any member of the public who is interested in the action to object. If no objection is made, the
court will hear the petitioner’s case ex-parte.
11.2 Arbitration
a. Types of arbitration
Under Thai law, arbitration can be in court and out of court. Arbitration in court can only take place where the case is
brought into the Court of Justice and before the Court of First Instance delivers its judgment.
Arbitration out of court is governed by the Arbitration Act B.E. 2545 (2002). Under the Arbitration Act, an arbitration
agreement is enforceable only if made in writing and signed by both parties, or if it appears in correspondence or
other documents or data interchange with electronic signatures between both parties agreeing on an arbitration
clause.
The parties can choose the place of arbitration and govern the process for ad hoc arbitrations or select institutional
rules to govern the arbitration.
b. Institutional arbitration
Institutional arbitration may be conducted in Thailand under the auspices of either the Arbitration Tribunal of the
Board of Trade (the Thai Chamber of Commerce) or the Thai Arbitration Institute of the Ministry of Justice. The
rules under the Board of Trade are called the Thai Commercial Arbitration Rules, and are modelled after the ICC’s
Conciliation and Arbitration Rules. The Thai Arbitration Institute of the Office of the Judiciary has adopted its own
arbitration rules which substantially reflect UNCITRAL’s model rules.
Generally the Thai Arbitration Institute confers broad power on the tribunal, resulting in limited intervention by
the court during the process. However, the tribunal may ask the court to intervene in some matters by issuing a
subpoena or an order for submission of any evidence i.e. documents or objects.
c. Enforcement of foreign arbitration awards

Under the Arbitration Act, there is no distinction between domestic and foreign arbitration. Pursuant to the Act, and
the New York Convention on Recognition and Enforcement of Foreign Arbitral Award 1958 (to which Thailand is a
signatory), irrespective of whether the arbitral award is domestic or foreign, it binds all parties and can be enforced
in Thailand upon application by either party to a competent court of jurisdiction. However, the competent court can
refuse to enforce the award if the party against whom the award was made can prove any of the matters specified by
the Arbitration Act. u
MAYER BROWN JSM 39

Chapter 14
Other Laws
12.1 Product Liability Act

The Product Liability Act was introduced in 2008, officially named the Act on Liability for Injuries from Unsafe Products B.E.
2551. The Product Liability Act covers injuries caused by unsafe products to life, body, health, well-being, emotions or property.
Damage which is caused to the unsafe product itself is excluded. “Product” covers all types of movable property, including
but not limited to any agricultural products, electricity. Currently agricultural product grown by farmers which has originated
from Thailand, as well as drugs and medical devices which have been manufactured by public healthcare service providers
for the specific use in treating individual patients or animals, or which have been manufactured in accordance with the public
healthcare service provider’s orders, are, where such drugs or medical devices have not been manufactured for sale to the
general public, exempted under this Act.
A product is deemed unsafe if it causes or is likely to cause damage. Damage, or the likelihood of damage, may arise from
production or design, inadequate directions for use or storage, or lack of warnings or other necessary information about the
product.
If a consumer suffers damage as a result of an unsafe product, the relevant business operator may be liable for compensation
to the consumer. The Product Liability Act gives power to the court to award compensation for mental distress. Punitive
damages of up to two times the actual damages incurred are also available. “Business operator” means: (i) manufacturers
or hirers for manufacture; (ii) importers; (iii) sellers of products, if the products do not indicate the manufacturer, hirer for
manufacture, or importer; and (iv) persons who use a name, trademark, trade name, mark, or statement that would lead to the
understanding that they are the manufacturer, hirer for manufacture or importer of the product in question.
Under this Act, where the product is found to be unsafe, the business operator is liable to injured persons, regardless of
whether the business operator intends or neglects to cause injury. Certain defence for the business operator is also available
in the Act.

12.2 Consumer Protection
The Consumer Protection Act, amended in 1998, is aimed at protecting consumers. Under the Consumer Protection Act, the
Consumer Protection Board chaired by the Prime Minister, is responsible for protecting consumers’ rights as contemplated
under the Consumer Protection Act. Three sub-committees, namely the Committee on Advertising, the Committee on
Labelling, and the Committee on Contracts, were established under supervision of the Consumer Protection Board.
The Committee on Advertising is empowered to prescribe the text, warnings, restrictions or advice that must be included in
advertisements for designated commodities. This is specifically to protect consumers from false, exaggerated, materially
misleading, illegal or indecent advertising, or advertising that may cause harm to the public.
The Committee on Labelling is empowered to review the information necessary to protect the health of consumers which
is required to be included and displayed on labels, and to ensure that labels do not contain misleading information. Goods
imported for sale in Thailand are subject to labelling control.
The Committee on Contracts is empowered to consider monitoring, restricting and announcing any types of business for
which contracts are to be a controlled business. A controlled business must not use a contract for its business that contains
any terms creating an unreasonable advantage over consumers or that is unfair to consumers. Certain businesses, e.g. credit
cards, car hire purchasing, and condominium unit sales, are controlled businesses.
12.3 Distributorship Arrangements

There is no specific land governing distributorship arrangements. The relationship between suppliers and distributors is
governed by general law on contract under the CCC. There is no requirement or process to register such an agreement.
The distributor is not considered the agent, representative, or go-between of the supplying company. Thus, the use of a
distributor by a foreign supplier for the sale of its goods in Thailand is not subject to any Thai tax on the income from its sales
to the distributor.
12.4 Licensees
Licence to use intellectual property rights, including its name, trademark, copyright, patent, trade secrets, technology, or
right to manufacture or sell a product based on such intellectual property rights, is available and protected under Thai law.
Licensing agreements must be made in writing and registered with the Registrar of the Department of Intellectual Property,
the MOC. The Registrar can refuse to register a licensing agreement if the agreement does not comply with requirements
under applicable law, or if it believes the agreement might confuse the public or conflict with public policy or morality.
Thai income tax is levied on licence fees paid to a foreign company or partnership by withholdings made at source. u
MAYER BROWN JSM 41

List of Abbreviations
BOI Board of Investment
BOT Bank of Thailand
EIA Report Environmental Impact Assessment Report
EPZ Export Processing Zone
GIZ General Industrial Zone
IEAT Industrial Estate Authority of Thailand
MOA Memorandum of Association
MOC Ministry of Commerce
NEB National Environmental Board
ONEP Office of Natural Resources and Environmental Policy and Planning
SEC Securities and Exchange Commission
SET Stock Exchange of Thailand
TFEX Thailand Futures Exchange
TRIPS Trade Related Aspects of Intellectual Property Rights

MAYER BROWN JSM 43
About Mayer Brown JSM
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Guide to

Doing Business in Thailand

04. Chapter 01: Introduction

05. Chapter 02: Legal System

08. Chapter 03: Foreign Investment

12. Chapter 04: Business Vehicles

15. Chapter 05: Real Estate

22. Chapter 06: Securities and Exchange

26. Chapter 07: Taxation

28. Chapter 08: Labour

31. Chapter 09: Intellectual Property

36. Chapter 10: Environmental Regulations

43. Chapter 11: Trade Competition

51. Chapter 12: Insolvency and Liquidation

57. Chapter 13: Dispute Resolution

2 Guide to Doing Business in Thailand

89. List of Abbreviations

The information in this publication is current to September 2015.

MAYER BROWN JSM

4 Guide to Doing Business in Thailand

MAYER BROWN JSM 5

1.1 Foreign Business Act

a. Definition of “foreigner” under the FBA:

6 Guide to Doing Business in Thailand

c.. Exemptions from requirements, as set forth in the FBA:

MAYER BROWN JSM 7

1.2 Investment Promotion

8 Guide to Doing Business in Thailand

c. Criteria for Approval:

1.3 Industrial Estates

1.4 Particular Areas of Business

1.5 Foreign Exchange Control

MAYER BROWN JSM 9

10 Guide to Doing Business in Thailand

2.1 Private Limited Company

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2.2 Public Limited Company

12 Guide to Doing Business in Thailand

2.4 Branch Office

2.5 Representative Office

Activities that a representative office is permitted to engage in are as follows:

MAYER BROWN JSM 13

2.6 Regional Office

2.7 Joint Ventures

14 Guide to Doing Business in Thailand

3.1 Acquisition of Land and Condominiums

MAYER BROWN JSM 15

3.2 Zoning and Planning

3.3 Building and Construction

3.4 Lease of Immovable Property

3.5 Real Estate Project Developments

16 Guide to Doing Business in Thailand

MAYER BROWN JSM 17

4.1 Securities Offering

Securities which may be listed include:

18 Guide to Doing Business in Thailand

• Mandatory tender offer;

• 25 percent of all voting rights;