Thailand

As the world grapples with geopolitical instability and shifting global trade dynamics – including the recent tensions along the Thai-Cambodian border and U.S. tax pressure – foreign investors may naturally feel cautious. However, a deeper look at Thailand’s economic fundamentals, legal framework, and proactive government policies reveals a resilient and attractive investment landscape. Strategic Location in ASEAN’s Economic Heart Thailand remains at the center of mainland Southeast Asia, serving as a natural hub for trade, logistics, and regional operations. The country is uniquely positioned to access over 660 million consumers across ASEAN, and continues to play a central role in regional supply chains, particularly in automotive, electronics, agritech, and medical industries. Even in the face of regional instability, Thailand’s infrastructure, cross-border logistics, and customs facilitation remain largely unaffected. The government has taken measured steps to insulate commercial zones and economic activities from political or military disruptions, maintaining a functional and secure environment for investors. Resilient Economy with Diversified Strengths Thailand boasts one of the most diversified economies in Southeast Asia. From advanced manufacturing and digital services to agriculture and tourism, the country is not overly dependent on any single sector or trading partner. This diversification has allowed the economy to absorb external shocks better than many of its neighbors. Additionally, Thailand has maintained a relatively low inflation rate and a stable currency, thanks to prudent fiscal and monetary policies. Despite global volatility, the country continues to register steady GDP growth, with significant inflows into green energy, logistics, biotech, and digital sectors. Robust Legal and Regulatory Environment Thailand’s legal infrastructure governing foreign direct investment (“FDI”) is mature, transparent, and business-friendly. Foreign investors are supported and protected under key laws such as the Investment Promotion Act (known as “BOI”) and Eastern Special Development Zone Act (known as “EEC”). Dispute resolution mechanisms, both judicial and arbitral, are well developed. The BOI and EEC continues to offer generous incentives for eligible businesses.   Sample Incentives Corporate income tax exemptions for up to 13 years; 100% foreign ownership in promoted sectors; Import duty exemptions on machinery and raw materials; and Work permit and visa facilitation for foreign staff. Even during geopolitical tensions, BOI and EEC remains fully operational and responsive. In fact, the Thai government has continually promoted digital infrastructure, clean energy, medical innovation, and EV-related investment by offering additional incentives to investors willing to participate in the nation’s strategic transformation. Political Neutrality in Trade Tensions While U.S. policies under Trump may reflect a trend toward economic nationalism, Thailand remains a politically neutral and open economy. It is a signatory to key international treaties such as the Regional Comprehensive Economic Partnership (RCEP), and maintains free trade agreements with China, Japan, Australia, India, and the EU (under negotiation). This neutral positioning allows investors in Thailand to maintain access to both Western and Eastern markets without being directly exposed to retaliatory trade barriers or tariffs.   Conclusion In uncertain times, clarity and control become vital. Thailand offers investors both: a clear legal pathway for foreign ownership, and a stable, investor-oriented environment to grow their regional footprint. While conflicts and shifting global politics may dominate the headlines, seasoned investors know that long-term success lies in resilience, diversification, and institutional support – all of which Thailand continues to deliver. If you're considering your next strategic move in Asia, Thailand deserves a closer look. For legal assistance, please contact: [email protected] Mr. Bunnasomboon Chaiparinya (Aaron) Partner / Head of Corporate Department Email: [email protected]    

Despite recent political unrest and ongoing border conflicts, Thailand has continued to attract foreign investors across several business sectors in recent years. While the overall concept of company incorporation may be similar to that of other countries, the specific criteria and process for establishing a company in Thailand differ in important ways. In this article, we address the most frequently asked questions from our clients about incorporating a company in Thailand. Our aim is to provide clear, practical explanations to help you begin the incorporation process with confidence. Question 1. Does Thai law allow a company to be 100% foreign owned? The Thai Civil and Commercial Code (the “CCC”), which is the law governing and regulating a limited company, does not prohibit foreigners from holding 100% of shares in a company. Therefore, a company can be legally established and exist with all its shares being held by foreigners. However, if foreigners own 51% or more of a company’s aggregate shares, the company will be regarded as a foreign company. It will then be subject to certain restrictions on business commencement—such as limitations on operating specific types of businesses—under the Foreign Business Act B.E. 2542 (the “FBA”). The details of these restrictions will be further elaborated. Question 2. What is the minimum number of shareholders and any other requirements? Currently, the CCC requires a limited company to have at least 2 shareholders at all time. Shareholders can be individuals and/or juristic persons. Noted that the company promoters, who play the key role in forming and registering the company, must be individuals and must subscribe at least 1 share when incorporate the company. Due to this requirement, these 2 individual promoters will be the initial shareholders of the company. Question 3. Is there any requirement on the minimum number or nationality of director? A company must have at least 1 director. Apart from appointing directors, the company must also register the authorized signatory directors and the signing conditions to bind the company. There are no restrictions or requirements on the qualifications or nationality of the director. However, in case the company is 100% Thai-owned but a foreigner is named the sole or joint authorized director, the company will be required to submit to the Department of Business Development (the “DBD”) the letter or certificate issued by the bank to confirm that all Thai shareholders in the company have a sufficient account balance to subscribe for the shares. The requirement that Thai shareholders must demonstrate financial capability by providing sufficient account balances exists to ensure that they are truly able to subscribe to the company's shares, rather than serving as nominees for foreign investors. This measure helps maintain genuine local ownership and prevents circumvention of foreign investment regulations, thereby supporting transparency and the integrity of Thailand’s business environment. Question 4. What is the minimum registered capital for a Thai company? There is no minimum registered capital required by the law and the company can be incorporated with the registered capital it deems appropriate for commencing its business. If the registered capital exceeds 5 million Thai Baht, the company will be required to submit, together with the application for incorporation to the DBD, the banking evidence which proves the remittance of share payment into any of the directors’ bank account. If all directors are foreigner and unable to open the bank account in Thailand for receiving the share payment, the DBD permits the required bank evidence to be submitted within 15 days after the DBD registrar approved the incorporation. Failure to comply with this timeframe, the DBD is empowered to revoke the incorporation. Question 5. What are the Articles of Association and how are they important? Articles of Association (the “AOA”) are the by-laws of the company. Apart from the provisions of the CCC, directors and shareholders are obligated to manage and control the company in accordance with the AOA. Basically, the AOA will specify certain basic rules about the company, such as, classes and groups of shares, number of directors, limitation of the authority of directors, how to summon shareholders’ or the board of directors’ meetings, how board of directors’ and shareholders’ resolutions can be passed, etc. The Articles of Association of the company can be established in one of the following ways: • Adoption of the provisions of corporate law under the CCC in the absence of any customized articles. • Standard template of AOA as provided by the DBD: The company adopts a government-issued template, which contains standard provisions approved by the authorities and is designed for general use. • Company’s own version of AOA: The company drafts its own set of rules, tailored to its specific needs and preferences, allowing for customization of governance and internal procedures. If the company decides to draft its own AOA, the DBD registrar will review to ensure that no articles are in contradiction to the provisions of the CCC. As such, this option will result in the longer registration period compared with the adoption of the CCC or standard template of the DBD as the company’s AOA. However, in the case of a joint venture company, certain clauses agreed upon by the parties to the joint venture agreement should be incorporated into the AOA. For example, provisions regarding meeting quorum, voting rights, and dividend entitlements should be included. Including these clauses in the AOA helps guarantee that the terms of the joint venture agreement are properly implemented and observed by all parties and the company itself. Question 6. Is it necessary for the company to have an office in Thailand? Yes, the CCC requires the company to register the address of its premises when incorporating the company and this premises must locate in Thailand. In addition to the address, an 11-digit house registration number must also be provided in the application. This house registration number can be found in the document called “Thai House Book” or in Thai as “Tabien Baan” which is an administrative document issued by the local municipality to the house owner or the landlord. In case the company leases space in the office building, the house registration number must be requested from the landlord or lessor. Question 7. Is it necessary to appoint an auditor by the time of the company incorporation? The CCC does not require the company to appoint its auditor by the time of its establishment. Therefore, the appointment of auditor and the determination of the remuneration can be resolved by the shareholders’ meeting later after the company incorporation. Question 8. What is the fiscal year for a company in Thailand? The fiscal year refers to the 12-month period used by a company for accounting and tax purposes. In Thailand, the company can choose its own fiscal year (e.g., April 1 to March 31 or July 1 to June 30) as long as it is clearly stated in its Articles of Association, which does not necessarily have to follow the calendar year (January 1 to December 31). Many companies prefer their fiscal year to start and end on the same date as their parent company. This alignment simplifies the process of combining financial statements and ensures consistency in reporting across the corporate group, making financial consolidation more efficient. Question 9. How long does it take to register a company in Thailand? The registration process typically takes about 3–5 working days after the complete application and supporting documents are submitted to the DBD registrar. The DBD registrar may require additional time to review the application, depending on the volume of pending cases and the complexity of the submission. For example, if the Articles of Association of the company are complex and contain many special clauses, this may take additional time for the registrar to review and approve the application. In some instances, the registrar may request amendments to the content of the Articles of Association to bring it in line with the provisions of the CCC. For instance, a clause that grants unusual voting rights to certain shareholders might need to be revised to comply with standard company law requirements. Question 10. Can a company immediately commence business in Thailand after being registered? Once the company is registered with the DBD, it can commence business within the scope of objectives it registered with the DBD. However, if 51% or more of total shares in the company is held by foreigner, its business operation will be subject to the restriction under the FBA. By virtue of the FBA, a foreign company is prohibited from carrying out certain types of businesses in Thailand unless they obtained a Foreign Business License (FBL) or Foreign Business Certificate (FBC) issued in accordance with the approval from the Board of Investment of Thailand (BOI), the Industrial Estate Authority of Thailand (IEAT), or in compliance with any treaty to which Thailand is a party. There are 3 Lists of prohibited businesses for foreigner as annexed to the FBA as follows: List 1: Businesses that are strictly prohibited for foreigners by special reason, such as land trading, rice farming, livestock farming, radio broadcasting station, extraction of Thai medicinal herbs, making or casting Buddha Images and monk alms-bowls, etc. List 2: Businesses related to national safety or security or having impacts on arts, culture, traditions, customs and folklore handicrafts or natural resources and the environment, such as production of wood carvings, domestic transportation, salt farming, mining, etc. List 3: Businesses that Thais are not ready to compete with foreigners, such as engineering services, architectural services, legal and/or accounting services, other services, construction, retail sale, wholesale, etc. For legal assistance, please contact: [email protected] Mr. Krittin Pollagan Partner 

An update on the draft amendment to Thailand’s Copyright Act In brief The new draft amendment to the Thai Copyright Act has been reviewed by the Office of the Council of State (OCS) and placed for public hearing between 8 and 22 August 2025, retaining the original draft’s intention to endorse performers’ rights while offering clearer, more detailed provisions. Here’s what’s new. In more detail Casting your mind back to 2023, we issued a newsletter detailing the draft amendment to the Copyright Act (link) and its objective of harmonizing Thai copyright law with the WIPO Performances and Phonograms Treaty (WPPT). An initial round of public hearings was scheduled to follow, culminating in the Cabinet’s approval of the draft amendment and its review by the OCS. In light of this, the Department of Intellectual Property has held another public hearing on the updated draft amendment to the Copyright Act between 8 and 22 August 2025. While the key provisions from the earlier draft remain relevant, the current version introduces several notable considerations, including: Definitions: To enhance clarity and ensure adaptability to the evolving electronic and digital landscape, the draft proposes revisions to the definitions of audiovisual work, cinematography, sound recording, communication to the public, and publication. Moral rights: The draft clarifies provisions on moral rights for both authors of copyrighted works and performers, including: (i) the right to be identified, and (ii) the right to object to derogatory treatment. It also introduces a remedy for authors and performers through the publication of court decisions concerning infringement of moral rights. New scheme for performer remuneration: Under the draft, performers are entitled to equitable remuneration for the use of their commercially published sound recordings (including those made available online for on-demand access), whether through sound broadcasting or communication to the public. Users of sound recordings shall make a single payment either (a) directly to the performer, or (b) to the copyright holder, who will subsequently allocate the remuneration to the performer. Where remuneration cannot be agreed upon, the Copyright Committee is vested with the authority to determine an equitable amount. Limitation period for transfer of remuneration rights: The draft proposes limiting the transfer of the right to remuneration to a maximum period of five years, whereas the existing law does not impose such restriction. However, any assignment agreement of performers’ rights executed prior to the effective date of this amendment and still in force shall remain unaffected by this change. Destruction of infringing goods in civil cases: To provide further remedies to rights holders, the draft amendment proposes authorizing courts to consider ordering the destruction of copyright-infringing goods in civil cases at the infringer’s expense, upon the rights holder’s request. This amendment also applies to cases ongoing in the courts on the effective date of this amendment. Removal of minimum penalties: The draft proposes to remove all minimum penalties for all liabilities under the Copyright Act, allowing courts to exercise more flexible discretion when imposing penalties. Once the draft is finalized, it will proceed through the legislative process in the House of Representatives. For further information, specific inquiries, or an assessment of how this draft amendment may affect your business operations, please contact our team for tailored assistance. Contact Us Nont Horayangura Partner nont.horayangura @bakermckenzie.com Yada Viseswongsa  Senior Associate yada.viseswongsa @bakermckenzie.com Burin Saekow Associate burin.saekow @bakermckenzie.com

Cannabis Legal History in Thailand Thailand has a long and complex relationship with cannabis. Historically, cannabis (ganja) was widely used for medical, culinary, and cultural purposes. For centuries, Thai traditional medicine employed cannabis extracts as remedies for pain relief, appetite stimulation, and treatment of various ailments. However, under the Narcotics Act B.E. 2522 (1979), cannabis was classified as a Category 5 narcotic, rendering its cultivation, possession, and use strictly illegal. Penalties for violations included imprisonment and heavy fines, and the substance became stigmatized as part of wider international anti-drug campaigns. The turning point began in the late 2010s, when global shifts toward decriminalization and medical legalization influenced Thailand’s domestic policy. In 2018, Thailand became the first country in Southeast Asia to legalize cannabis for medical and research purposes (Narcotics Act (No. 7) B.E. 2562 (2019)), allowing limited use of cannabis oil, extracts, and research-based cultivation. At that time, operators were required to work closely with public agencies, such as universities or government hospitals, to cultivate and extract cannabis. In June 2022, cannabis was officially decriminalized through its removal from the Narcotics List under the Ministerial Notification of the Ministry of Public Health (No. 8) B.E. 2565 (2022). This sparked a rapid proliferation of cannabis-related businesses—from dispensaries and cafes to wellness centers and agricultural ventures. Nevertheless, the swift liberalization also triggered regulatory uncertainty and social debates. The lack of comprehensive oversight, concerns about recreational misuse, and rising public health risks pushed policymakers to reintroduce tighter controls, culminating in the Cannabis and Hemp Control Act (Draft Bill, 2024–2025) and ministerial notifications that now aim to balance economic opportunity with public health and social order.  New Approach of Legal Laws and Regulations in Thailand 2.1 Current Legal Framework Following decriminalization in June 2022, cannabis entered a “grey zone” of regulation. Businesses mushroomed quickly, taking advantage of unclear restrictions, especially regarding recreational use. However, by mid-2025, the Thai government introduced new legislation and ministerial regulations to formally control cannabis cultivation, distribution, marketing, and consumption. Key provisions include: Cultivation Standards: Cultivation of cannabis and hemp requires compliance with Thai GACP (Good Agricultural and Collection Practices) standards, ensuring both quality and traceability of cannabis flowers. Licensing Requirements: Cultivation, import/export, sales, and processing of cannabis require specific licenses issued by the Food and Drug Administration (FDA) and relevant ministries under the Public Health Act B.E. 2535 (1992) and ministerial notifications. Medical-Only Orientation: Cannabis is recognized as a controlled plant for medical and health purposes. Recreational use remains outside the scope of the law and is implicitly prohibited. Doctor’s Prescription Requirement: Any sale of cannabis flowers intended for smoking or direct consumption must be tied to medical use, supported by a prescription from a licensed physician (Ministerial Notification on Controlled Cannabis Products B.E. 2566 (2023)). Any cannabis distillate, extract, or oil with THC exceeding 0.2% w/w is classified as a controlled substance under the Narcotics Act and may only be dispensed upon a doctor’s prescription. Extracts with THC not exceeding 0.2% w/w may be incorporated into cosmetics, herbal, or food supplements, subject to FDA product registration, quality controls, and labeling requirements. Usage Restrictions: Smoking cannabis in public places remains subject to penalties under the Public Health Act on public nuisance. Marketing and advertising are prohibited from promoting recreational consumption or targeting minors (Ministerial Regulation on Cannabis Advertising B.E. 2566 (2023)). Import & Export Controls: Cross-border trade of cannabis or hemp requires pre-approval from the Ministry of Public Health, in line with Thailand’s obligations under the Single Convention on Narcotic Drugs 1961 and domestic legislation. 2.2 Impact on Businesses These rules have reshaped the cannabis landscape. Dispensaries and recreational-style outlets face heightened scrutiny, while medical clinics, licensed manufacturing plants, pharmaceutical companies, and wellness enterprises benefit from clearer compliance pathways. Notably, businesses engaged in the sale of cannabis flowers or high-THC distillates (>0.2% THC w/w) must operate strictly as medical establishments, employing licensed doctors authorized to prescribe cannabis products. This effectively transforms retail-style models into clinically regulated practices, raising compliance and operational costs. Foreign investment in cannabis remains restricted under the Foreign Business Act B.E. 2542 (1999), which caps foreign ownership in agricultural and service sectors unless exemptions are granted. While the Board of Investment (BOI) offers privileges for certain high-value industries, cannabis has not yet been included in BOI-promoted activities. In practice, without a permanent Cannabis Act, obtaining BOI promotion for cannabis businesses is unlikely. Additionally, intellectual property (IP) protections for cannabis strains, cultivation techniques, and extraction processes are increasingly important, as licensing agreements and IP filings help safeguard competitiveness in a regulated market. The Future of Cannabis Business in Thailand and Risk Assessment 3.1 Opportunities and Policy Direction Despite regulatory tightening, the government continues to view cannabis as a sector with high potential in: Medical tourism and integrative health services. Pharmaceutical production with EU-GMP certification for cannabis-derived medicines. Agriculture, with cannabis and hemp positioned as high-value crops under Thai GACP. Industrial hemp exports, including textiles, food supplements, and construction materials. While rumors persist that the government may re-criminalize cannabis, such a move would face strong resistance—including potential class actions from over one million licensed cannabis operators. More realistically, cannabis will remain regulated for medical, industrial, and research purposes, rather than being reclassified as a narcotic. 3.2 Risks in Cannabis Business Regulatory Uncertainty Laws remain in flux. Political changes or international obligations may prompt abrupt policy reversals. Example: The 2022–2023 decriminalization wave was quickly followed by 2024–2025 restrictive reforms. Criminal Liability Unauthorized possession, sale, or use outside medical purposes may trigger penalties under the Narcotics Act B.E. 2522 (1979) or ministerial cannabis regulations. High risk: Dispensing cannabis flowers or >0.2% THC distillates without a prescription may result in imprisonment, fines, and license revocation. Public Health and Social Concerns Businesses risk reputational damage if linked to recreational misuse, underage sales, or public nuisance. Such events may also lead to license suspension by the FDA. Foreign Investor Restrictions The Foreign Business Act limits foreign participation in agriculture and cannabis-related services, unless exemptions are granted. Banking and Financing Risks Cannabis remains a “no-bank” sector in Thailand. Commercial banks typically refuse financing, credit facilities, or lending to cannabis operators due to compliance risks and reputational concerns. Cross-Border Legal Conflicts Exporting cannabis products without authorization can violate ASEAN neighbors’ narcotics laws, leading to severe penalties. Exporters must hold FDA export licenses, while importers must obtain permits from the destination country. Compliance and Licensing Costs Meeting Thai GACP and GMP standards requires significant investment. Smaller operators may be priced out, resulting in consolidation favoring larger, well-capitalized firms. 3.3 Risk Mitigation Strategies Robust Legal Due Diligence: Review licensing requirements, corporate structure, and contracts with qualified legal counsel. Strict Prescription Protocols: Employ licensed doctors and establish patient consultation systems for prescribing cannabis flowers and high-THC distillates. Regulatory Monitoring: Retain compliance teams or external counsel to monitor ministerial notifications and regulatory changes. Corporate Structuring: Form vetted joint ventures with reliable Thai partners. Conduct strict due diligence to avoid fraudulent actors in the market. Product & Marketing Compliance: Adhere to THC content limits, labeling rules, and advertising restrictions. Avoid recreational branding. Risk Management & Insurance: Obtain liability insurance and adopt strong corporate governance policies. Diversification: Focus on industrial hemp, medical cannabis, and pharmaceutical-grade extracts, which carry fewer political and legal risks. Cross-Border Legal Review: Secure legal opinions in both Thailand and destination countries to ensure compliance with international drug control treaties. Conclusion The cannabis industry in Thailand represents both opportunity and risk. Thailand stands as a pioneer in Southeast Asia, opening pathways for medical, wellness, and industrial cannabis. Yet the regulatory environment remains fluid, and businesses face legal, financial, and reputational challenges. Of particular importance is the strict requirement that cannabis flowers and all cannabis distillates with more than 0.2% THC w/w can only be sold with a doctor’s prescription. Violations in this area carry serious criminal and civil liabilities and will be a central enforcement priority going forward. For investors and operators, success depends on rigorous compliance, sound structuring, and proactive legal strategy. By aligning with Thailand’s evolving regulatory framework, businesses can capture opportunities while minimizing risk. At ILAWASIA CO., LTD., we provide comprehensive legal support for cannabis operators. Our Partner, Tanadee Pantumkomon, is one of the most experienced counsels in Thailand on cannabis cultivation, extraction, and cannabis product manufacturing. Our services cover FDA licensing and permits, corporate structuring, tax planning, dispute resolution, and cross-border advisory—ensuring that our clients’ investments are secure and compliant.