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December 4, 2018

New Guarantee Requirement for Direct Sales and Direct Marketing Businesses

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A new Ministerial Regulation was published in the Royal Thai Government Gazette  on November 20, 2018, requiring existing business operators who are engaged in direct sales or direct marketing activities to place a guarantee with the Office of the Consumer Protection Board of Thailand (OCPB) within 90 days, i.e. by February 17, 2019.

The new regulation, which was issued under the authority of the updated Direct Sales and Direct Marketing Act (No. 3), B.E. 2560 (2017), affects existing registered direct sales and direct marketing business operators and new applicants alike. New applicants will be required to pay a fixed fee, while existing business operators who are already registered will be subject to rates based on their gross revenue.

Guarantees under the new regulation can be made in cash, bank guarantees, government bonds, and state-enterprise bonds.

The key requirements of the Ministerial Regulation are set out below:

  • New applicants must place the required guarantee with the OCPB within 30 days of receiving a notification letter from the OCPB. Failure to place the required guarantee within the prescribed timeframe will result in the OCPB rejecting the application.
  • All existing registered business operators must place the required guarantee with the OCPB by February 17, 2019. Failure to place the required guarantee within the prescribed timeframe may result in the OCPB cancelling their operating license.
  • When placing the guarantee, new applicants or existing registered business operators must use the applicable official form, to be announced by Direct Sales and Direct Marketing Committee.
  • Every registered business operator must inform the OCPB of its gross annual revenue within 60 days of the end of each fiscal year. The OCPB registrar will then determine whether the registered business operator’s guarantee should be increased. If an increase is necessary, the OCPB will notify the registered business operator accordingly, either in writing or electronically. The registered business operator will then have 60 days to comply by placing an additional guarantee. Failure to place the required guarantee within the prescribed timeframe may result in the OCPB cancelling the business operation license.
  • Registered business operators can change the form of a guarantee placed with the OCPB (excluding cash), by submitting a request and a new guarantee.

The rates of guarantees under the Ministerial Regulation are as follows:

Direct sales and direct marketing business operators should ensure that they take all necessary steps to comply with the Ministerial Regulation by the deadline of February 17, 2019. Failure to do so may negatively affect their registration status.

If you have any questions regarding the new guarantee, the new Ministerial Regulation, or any matter concerning direct sales and direct marketing businesses, please feel free contact us at: [email protected], or on +66 2056 5555.

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