You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

September 8, 2022

Thailand Tightens Definition of SMEs Eligible for Special Protection from Unfair Credit Terms

Subscribe to Updates

Thailand’s Trade Competition Commission has amended the guidelines prohibiting large purchasers from setting unfair credit terms for small and medium-sized enterprises (SMEs). The new guidelines, which were published in the Government Gazette on August 17, 2022, revise the definition of SMEs and clarify the duties of concerned parties.

The original guidelines, which took effect in December 2021, set a favorable maximum period for credit terms for SMEs selling products or services to a third-party purchaser. Prescribing longer credit terms than the mandatory period would constitute an unfair trade practice in violation of the Trade Competition Act B.E. 2560 (2017).

In defining what businesses are considered SMEs, the guidelines set thresholds for the number of employees and amount of annual turnover. The amended guidelines maintain these thresholds, but the new guidelines require that both employee-number and turnover thresholds be met in order for a business to be considered an SME. In contrast, the original guidelines only required either the employee-number threshold or the turnover threshold to be met. This amendment will likely mean that fewer business operators qualify as SMEs.

Accordingly, two types of businesses are defined as SMEs under the guidelines:

  • Manufacturers of goods with up to 200 employees and an annual turnover of no more than THB 500 million (approximately USD 13.5 million); or
  • Service providers or wholesale or retail businesses with up to 100 employees and an annual turnover of no more than THB 300 million (approximately USD 8.1 million).

To benefit from protection under the new guidelines against unfair credit terms, SMEs must provide documents proving the number of employees and the amount of annual turnover to trade partners that purchase goods or services from them.

The new guidelines come into force on September 16, 2022.

For more information on the unfair credit term guidelines, or on any aspect of compliance with Thailand’s antitrust and competition laws, please contact Kobkit Thienpreecha at [email protected] or +66 2056 5534, Nutavit Sirikan at [email protected] or +66 2056 5510, or Suphitsara Jaturaphitjaroen at [email protected] or +66 2056 5645.

Related Professionals

Practices

Antitrust and Competition

Corporate/M&A

Customs and International Trade

Location

RELATED INSIGHTS​ 

April 28, 2023
On March 28, 2023, Cambodia’s Ministry of Economy and Finance and Ministry of Commerce issued Inter-Ministerial Prakas No. 168 on Penalties for Persons Violating the Law on Competition. This release was in line with the country’s recent establishment of a framework and thresholds for merger filings. The penalties for violating the Law on Competition center on the following three offenses: 1.  Entering into vertical agreements. This can be done by: requiring buyers to resell goods or services in limited geographic locations; requiring buyers to resell goods or services to specific customers or specific types of customers; requiring buyers to purchase goods or services from one seller only; preventing sellers from selling goods or service to other buyers; or requiring buyers to buy additional goods or services that are not related to the goods or services being sold. 2. Abusing a dominant market position. This can be done by: requiring or persuading suppliers or customers to not do business with competitors; refusing to supply goods or services to competitors; selling goods or services subject to commercial terms that require buyers to buy other goods or services separately that are not related to the purpose of the transaction; selling goods or services below production cost; or refusing to give competitors access to the necessary means of selling their goods and services. 3.  Undertaking a business combination that actually or potentially restricts or distorts market competition. Each of these violations is punishable by a fine of 3% to 10% of the infringer’s total turnover during the period of violation, limited to three years. Next Steps The first half of 2023 has seen three new regulations strengthening Cambodia’s competition law framework, as noted above. Although certain unclear terms do remain, regulators are expected to issue additional decisions in 2023. For more details on
Read More
April 20, 2023
In 2018, following enactment of the Myanmar Companies Law (MCL), the Directorate of Investment and Company Administration (DICA) launched Myanmar Companies Online (MyCO), an official online platform for corporate registration. The MCL required companies to re-register in MyCO, but some companies did not complete this step within the date provided by the law. In addition, the MCL introduced a requirement for companies to file an annual return through MyCO. Some companies have also failed to do this, which can eventually lead to DICA automatically striking the company’s name from the register. If a company has not re-registered, it must follow specific administrative procedures to “activate” the company in MyCO. There are also administrative procedures allowing for restoration of companies that have been struck from the DICA register. This article considers the ramifications of each of these scenarios and outlines potential next steps for companies facing these challenges. Activating a Company Not Yet Re-registered Prior to enactment of the MCL, all companies were formed under the Myanmar Companies Act 1914, which was the primary law governing registration and operation of companies in the country. Once the MCL was passed, companies were required to re-register online via MyCO by January 31, 2019. For companies that did not re-register on MyCO, the company’s name, old registration number, and registration date under the Myanmar Companies Act 1914 was recorded in MyCO, and the status of the company was set as “Not Yet Re-registered.” Companies assigned this status should not assume that it means the company was struck off the DICA register. Rather, the DICA states that if a company is listed as not re-registered on MyCO, it can still re-register by fulfilling the requirements specified in the MCL. In order to re-register under the MCL, the company must obtain a court order to
Read More
April 10, 2023
On April 1, 2023, Myanmar’s Directorate of Investment and Companies Administration (DICA) announced additional reporting requirements for newly registered companies. According to the announcement, newly established companies must submit the required information to DICA by email within two months of their registration and before submitting their first annual return (AR) to DICA through the Myanmar Companies Online (MyCO) system as required under the Myanmar Companies Law 2017 (MCL). The reporting requirements include: Proof that the bank account established in the company’s name has been credited with the paid-up capital shown in the MyCO system. Verification of individuals listed as directors of the company. For directors who are Myanmar citizens, this consists of confirmation from the relevant township police office that the director actually resides at the address stated in the national registration card and the application for company registration (Form A). For directors who are foreign nationals, the required verification is proof of compliance with the Registration of Foreigners Rules 1948 (such as Immigration Form C). Confirmation from the relevant township police office that the registered address of the company matches an actual location and that the company is planning to open an office. Verification of individuals and entities listed as members of the company. For individual registered members, the requirements are the same as for individual directors (see above). For legal entities that are registered members, the entity’s certificate of incorporation must be provided. Once a newly registered company submits this information by email, the registrar will review it manually. Companies that fail to submit the required information will not be able to submit their first AR documentation. If this happens, the DICA registrar will issue a notice, and the company will have 28 days to submit its AR and pay all outstanding fees and penalties, or face automatic
Read More
March 29, 2023
On March 14, 2023, the Competition Commission of Cambodia (CCC) set out its merger filing thresholds in Decision No. 095 on Thresholds for Prior Notification of Business Mergers. This was a follow-up to the recent issuance of a regulation outlining the requirements and procedures for merger and acquisition filings. Decision No. 095 applies to all business combinations subject to premerger notification requirements under this prior regulation. The thresholds for when the CCC must be notified of a merger are laid out in the table below. In current practice, the term “turnover” typically refers to a company’s total sales revenue, while “input purchase turnover” denotes the value of materials or equipment acquired for production purposes. Although this reflects the initial interpretation of these terms, it is advisable to seek confirmation or clarification from the CCC before the filing to ensure accuracy and alignment with their current definitions, as it is conceivable that the interpretation may change. Decision No. 095 leaves room for the Ministry of Commerce to amend these thresholds as deemed necessary. Outlook In the last two years, Cambodia has steadily issued regulations to strengthen its legal framework for competition. Although gaps remain, especially with regard to enforcement of fines and certain unclear terms, more regulations are likely in 2025 and 2026.
Read More