Tracking regulatory developments in Thailand

The Ministry of Commerce of Thailand has launched a public hearing in relation to draft ministerial regulations (the Draft Regulations) specifying business activities which will be exempt from the requirement to obtain a Foreign Business License (FBL) under Thailand’s Foreign Business Act B.E. 2542 (1999) (as amended) (FBA). 

Under the FBA, a foreigner (as defined therein) is required to obtain an FBL to conduct certain business activities in Thailand. Pursuant to the Draft Regulations, the provision of a guarantee in connection with domestic indebtedness between related legal entities would be excluded from this requirement.

Under the Draft Regulations, related legal entities are described as follows:

1. more than half of the shareholders or partners (as the case may be) of a legal entity are also more than half of the shareholders or partners (as the case may be) of the other legal entity; or
2. shareholder(s) or partner(s) (as the case may be) having the value of at least 50 per cent. of capital of a legal entity has shareholding or partnership (as the case may be) with value of at least 50 per cent. of capital of the other legal entity; or
3. a legal entity is a shareholder or partner (as the case may be) having the value of at least 50 per cent. of the capital in the other legal entity; or
4. more than half of the directors or partners (as the case may be) with management power of a legal entity are also more than half of the directors or partners (as the case may be) with management power in the other legal entity.

The proposed exclusion aims to promote operational efficiency, liquidity and enhanced financial management within corporate groups. Furthermore, additional credit support in the form of a guarantee from a related entity should provide businesses with increased access to investment from financial institutions.

The public hearing was scheduled to end by mid-March 2024. Following the public hearing, assuming no further changes are to be made, the Draft Regulations will be submitted to the Cabinet for approval and published in the Royal Gazette.