Thailand’s Startup Revolution: Unlocking Investment and Innovation (Thailand)

2. Governance & Oversight

The Draft Act establishes a Startup Promotion Committee, responsible for formulating policies, strategies, and plans aligned with national science, research, and innovation priorities. The Committee oversees implementation, approves measures proposed by the NIA, recommends legal amendments, and monitors compliance and emerging issues. Subcommittees may be formed for specific tasks, and members are entitled to remuneration for their service.

The NIA acts as the primary operational body, managing administrative functions, coordinating with public and private agencies, providing guidance and support to startups, facilitating funding, investment, and equity programs, and maintaining a centralized, updated database of rights, benefits, programs, and funding sources. It also monitors the performance of startups and incubators, analyzes challenges and success factors, studies international best practices, and fosters collaborations to ensure startups can scale, access resources, and thrive within a structured, supportive ecosystem.

3. Eligibility Criteria for Startups

Under the Draft Act, a startup is defined as a business engaged in the production, distribution, or provision of goods or services with high growth potential, driven by innovation, whether through new technology, advanced know-how, or a novel business model central to operations.

To qualify as a “Promoted Startup”, a company must:

• Be a limited company established for no more than 10 years;
• Have an average annual revenue of no more than THB 300 million over the preceding three years in accordance with the Committee Criteria; however, such revenue may differ between business sectors;
• Never have distributed dividends; and
• Not be a controlled subsidiary, unless the parent is also a qualified startup or a company established by a university research entity.

Promoted Startups need to apply through the NIA’s online self-declaration system, with annual self-certification to maintain eligibility.

4. Modernizing Fundraising and Ownership Structures

To modernize Thailand’s legal framework with modern venture practices, the Draft Act introduces targeted exceptions to the CCC, enabling greater fundraising and ownership flexibility.

• Public and Debt Offerings: Promoted Startups may issue shares to the public and offer debentures, subject to shareholder approval and the Capital Market Supervisory Board’s rules under applicable securities regulations.
• Treasury Stocks: Promoted Startups may hold up to 20% of their own shares through buy-backs or capital increases. These shares carry no voting, quorum, or dividend rights. Buy-backs are permissible under certain circumstances if allowed by the company’s articles of association, approved by shareholders, and within conditions prescribed by the Capital Market Supervisory Board.
• Issuance to Non-Shareholders: To the extent permitted by the articles of association and in accordance with special shareholder resolutions, Promoted Startups may issue new shares to employees, directors, or external investors under approved employee equity schemes or investment arrangements.
• Share Allocation to Employees or Directors: Repurchased or newly issued shares may be reallocated under employee equity schemes for employees or directors or investment arrangements for investors, as approved by shareholders. Allocations must be completed within defined project periods: up to five years for employee plans and up to two years for investor allocations.
• Debt-to-Equity Conversion: Promoted Startups carrying out capital increases for investor allocations may allow investors who are creditors under pre-existing investment agreements to convert debt into equity, offsetting the debt instead of paying for newly issued shares. This mechanism provides flexibility for venture financing and bridge investments.
• Convertible Preference Shares: The Draft Act permits the conversion of preferred shares into ordinary shares when authorized under the company’s articles of association, facilitating smoother transitions between financing rounds.

Promoted Startups may also access additional incentives, including facilitated immigration for foreign experts, tax exemptions or reductions, government procurement participation, enhanced IP protections, financial and non-financial support from the NIA, and eligibility for investment promotion under laws governing the Board of Investment, targeted industries, or the Eastern Economic Corridor.

In addition to these corporate and fundraising privileges, Promoted Startups may receive additional support from relevant authorities, including facilitated immigration and work permits for foreign experts, tax exemptions or reductions, access to government procurement programs, enhanced intellectual property protections, financial or non-financial support from the NIA, and eligibility for investment promotion or competitiveness measures under laws governing the Board of Investment, targeted industries, or the Eastern Economic Corridor.

Together, these measures modernize corporate structures, support employee equity participation, and make Thai startups more competitive and investor-friendly.

Conclusion

The Draft Act is a landmark initiative designed to transform Thailand’s startup ecosystem by providing Promoted Startups with enhanced legal flexibility, streamlined fundraising mechanisms, and access to targeted incentives and support programs. By aligning domestic corporate law with global venture practices, it strengthens Thailand’s investment ecosystem, facilitates foreign direct investment (FDI), and creates a more competitive environment for both local and international investors. With improved governance, clear eligibility criteria, and centralized oversight by the NIA, Thai startups are better positioned to attract capital, retain talent, and scale efficiently, ultimately driving innovation, economic growth, and global competitiveness.

For further information and any questions in relation to the issues in this newsletter, please contact Supasit Boonsanong at supasit.b@nagashima.com or Kobchai Nitungkorn at kobchai.n@nagashima.com.