Thailand is taking steps to energize its startup scene by drafting the Startup Promotion Law. This draft law aims to remove obstacles, open new funding opportunities, and provide coordinated government support. The goal is to make it easier for Thailand-based startups to grow and compete on a global stage.
Why Is This Law Needed?
For many years, Thai startups have operated under traditional company law frameworks that were not designed with high-growth businesses or with fundraising opportunities in mind. Restrictions on issuing bonds, offering shares to outside investors, and repurchasing shares for employee incentive programs made it challenging for emerging companies to access capital and accelerate their growth. The draft Startup Promotion Act seeks to remove these obstacles and foster a more competitive, entrepreneur-friendly environment in Thailand.
Who’s in Charge?
Two main organizations will oversee the startup ecosystem:
- Startup Promotion Committee: This group, to be appointed by the National Science, Research, and Innovation Policy Council, will set national strategies, policies, and budget; design promotional campaign and incentives; and propose further legislative amendments to promote startups.
- National Innovation Agency (NIA): Under the draft act, the NIA will be the main contact for startups and will serve as the secretariat office of the Startup Promotion Committee, coordinating data, advising startups, maintaining the public registry, and providing funding and investment (grants, repayable grants, loans, and equity) under committee criteria and, where applicable, cabinet approval.
What Startups Are Eligible for Benefits?
To be officially recognized and access benefits, a company must:
- Be a private limited company less than 10 years old at the time of application. Existing companies that already exceed the 10-year threshold may still apply for startup statues within one year of the law’s enactment, as long as they otherwise still qualify for the new regime.
- Have average annual revenue not exceeding THB 300 million over the past three years (with possible adjustments for different sectors).
- Never have declared dividends before.
- Not be controlled by another company, unless the parent is also a certified startup or a university spinoff focused on commercializing research.
Application Process
Applications must be submitted online to the NIA, and applicants must certify the accuracy of all information provided. Once approved, the company’s name will be published by the NIA on a list categorized by business sector.
Labor Requirement
Within two years of certification, startups must employ a minimum number of qualified Thai workers, as specified by the Startup Promotion Committee.
What Are the Main Benefits for Eligible Startups?
Certified startups will receive special privileges for five years. For categories designated as deep‑tech, the committee may extend the term for a total of up to ten years.
Flexible Corporate Financing
- Startups can publicly offer shares and issue corporate bonds, which are currently restricted under Thai law.
- They can allocate new shares to outside investors in addition to existing shareholders.
- Debt can be converted into equity, making it easier to use modern investment tools like convertible notes.
- Preferred shares can be converted into ordinary shares.
- Startups can buy back up to 20% of their own shares as treasury stock. Buybacks are allowed for financial management, fulfilling investment agreements, or acquiring shares from dissenting shareholders. Treasury shares can be used for employee stock option programs (ESOPs) or future investment allocations.
Government Support Measures
- Tax incentives: Access to tax benefits designed to support startup growth.
- Immigration benefits: Facilitation under existing immigration and foreign-worker laws; the committee may propose categories of qualified foreign experts and high-skill personnel for certified startups.
- Government procurement: Where suitable, agencies will treat certified startups’ goods and services as items the state intends to promote under the Public Procurement and Supplies Administration Act.
- Intellectual property support: Assistance with IP registration and protection.
- Investment incentives: Eligibility for incentives under the Board of Investment (BOI), Eastern Economic Corridor (EEC), and other competitiveness enhancement initiatives.
The draft law requires the relevant government agencies to assist certified startups in accessing these applicable benefits. The NIA will coordinate information, request documents, and serve as a hub connecting startups to tax, immigration, procurement, IP, BOI/EEC, and other authorities.
How Is Compliance Enforced?
The law sets out clear sanctions and other mechanisms to make sure only eligible startups benefit and that privileges are not abused:
- Administrative fines: Fines range from THB 20,000 to THB 100,000 for violations such as unlawful public offerings of shares or bonds, holding too many treasury shares, failing to maintain a share register, or not canceling unallocated shares after a project ends. Ongoing violations can result in additional daily fines.
- Personal liability: Directors, managers, and responsible officers can be held personally liable if a violation occurs due to their actions or inaction.
- Annual reconfirmation: Startups must reconfirm their eligibility every year. Failure to do so, or providing false information, can result in removal from the official list and loss of benefits.
- Oversight and monitoring: The NIA monitors compliance and may conduct checks or request more information from certified startups.
Outlook
Thailand’s Startup Promotion Law is a significant step toward modernizing business regulations and supporting local innovation. By making fundraising easier and improving access to government support, the law aims to help startups grow and compete internationally. The draft act has completed public consultation and is now progressing to Parliament, and both startups and investors should keep track of its developments.
