Thai Civil and Commercial Code Amendment: Introduction of Merger Scheme and Flexibility for Corporate Governance of Limited Companies

November 9, 2022
On September 14, 2022, the Parliament approved the draft of the Act Amending the Thai Civil and Commercial Code (the “Amendment Act”) covering Title XXII on Partnerships and Limited Companies. Under this Amendment Act, a new M&A scheme and amended corporate governance requirements have been introduced for limited companies. The draft was initiated by the Department of Business Development (“DBD”) with the goal of facilitating business operations by revising outdated requirements, removing excessive corporate compliance obligations, and promoting the business consolidation scheme under the Thai Civil and Commercial Code (the “TCCC”). The Amendment Act was recently submitted to the Cabinet for His Majesty the King’s signature on September 19, 2022, and will take effect 90 days following its announcement in the Government Gazette. This article highlights key elements of the Amendment Act, as well as comparisons with the existing provisions under the TCCC and the implications for business operators. Key Elements of the Amendment Act The groundbreaking changes proposed under the Amendment Act can be divided into three major aspects as set out in the following table. Topic Details 1. Company Establishment (i)      Minimum Number of Promotors Section 1097 of the TCCC requires a limited company to have at least three individuals as promotors upon its incorporation. The Amendment Act reduces the minimum number of promotors required to just two individuals. (ii)    The Memorandum of Association While Section 1099 of the TCCC does not provide any deadline for the registration of a limited company’s Memorandum of Association, the Amendment Act requires that the company shall be incorporated within three months from the registration date of its Memorandum of Association with the DBD. In...

The Greater China IP Updates – October 2022

October 17, 2022
Taiwan IP Office Adjusts Guidelines for Parallel Filing Effective July 1st 2022, the Taiwan Intellectual Property Office has ordered some changes to the Patent Examination Guidelines.  Concerning parallel filing, there were some questions as to how the IP Office should handle a pending invention patent application if, in the meantime, the granted utility model that covers the same subject matter is invalidated.  First of all, it should be noted that filing an invention patent application and a utility model application on the same day, by the same applicant and for the same subject matter, is a commonplace and practical strategy for getting early protection of an invention.  Utility models, giving protection of the shape and structure of an article, aren’t examined substantively, so they will be granted protection within just a few months.  On the other hand, the examination of an invention application for the same subject matter will take longer.  That could take up to one year or so, and if the invention patent application is allowed, the applicant can then opt for either the allowed invention application or the already granted utility model.  If the former is chosen, the utility model rights will be extinguished.  With the new guidelines, the procedure about how to deal with parallel filings when the granted utility model is invalidated has now been decided upon.  Now, the validity of an invention patent application must remain consistent with the validity of the granted utility model.  If the utility model invalidation is appealed, the examination of the invention patent application should be suspended during that process.  The applicant does, however, have the right to...

International Arbitration and the Circle of Control

October 4, 2022
A Look at the psychological benefits of arbitration and the status of arbitration in Thailand There are often many reasons cited as to why international arbitration should be the preferred method of dispute resolution for parties: it can be quicker, cheaper, the process is private, the award is final and the parties have more autonomy over the process. Whilst some of these factors are debatable (especially in highly complex commercial cases), the fact that parties to an arbitration can have more autonomy than in traditional court litigation is usually less controversial. Party autonomy in arbitration is often a significant factor that persuades contractual parties to consider arbitration over other methods of dispute resolution. This is not surprising, as the need to have control and certainty is an innate human desire that often brings us security and peace. Our need for control and certainty There is no doubt that Covid has had a detrimental effect on the economy and many businesses. Most people would also agree that it has taken a significant toll on people’s mental health. Social distancing forced people to keep a distance and lose close contact with friends and colleagues. For some people, it meant a loss of social contact and socialising all together, due to fear of catching the virus if they stepped out of the safety of their homes. Lockdowns and school closures meant that more families were stuck at home, glued to their computers for work or online school and having to navigate the lack of privacy and personal space in their own homes. For working parents, the stress of juggling work from home, not...

The Thai Cabinet has Approved the Draft Royal Decree Regarding VAT Exemption for Data Hosting Services to Promote Investment in Data Centers

October 4, 2022
As data centers play a crucial role in the growing digital world, many businesses undoubtedly need reliable data hosting services to facilitate better data management. The Thai cabinet recognizes the importance of the data center industry and data hosting services and has recently approved in principle a tax measure to promote data centers by providing a value added tax (VAT) exemption for data hosting services to attract hyperscale data center investments, in order for Thailand to become a regional digital hub and to have more competitive pricing of data hosting services. Currently, Thai VAT is levied at the rate of 7%. The definition of “Hyperscale Data Center” is currently quite broad. A Hyperscale Data Center would offer a highly responsive, scalable and cost-effective infrastructure that simplifies business procedures. As the need for data processing and storage has increased, the demand for Hyperscale Data Centers will swell. Nowadays, the demand for Hyperscale Data Centers is accelerating due to many factors, such as remote working during the Covid-19 pandemic or the increase in adoption of digitalization. These factors greatly contribute to the growth in the Hyperscale Data Center market.  At present, there is no exact definition for “Hyperscale Data Center” under Thai law, however, the Revenue Department may formulate a definition of data center that will be treated as the definition of Hyperscale Data Center in the Royal Decree. Details of the draft Royal Decree issued under the Revenue Code regarding VAT exemption for data hosting services are summarized below. VAT will be exempt for the following services: Services for servers or related equipment for storing, processing and connecting electronic data...

Cannabis Use by Employees in Thailand

October 4, 2022
What is allowed and what isn’t allowed? There was a lot of hype earlier this year about the delisting of cannabis and hemp plants from the Narcotics Code in Thailand. However, there appears to be some confusion about cannabis use within the country and in particular, what is permitted and not permitted without a license. In order to prevent misuse and a society-wide problem, the Thai government has been elaborating on the permitted use and sale of cannabis in the last few months. This article examines the current state of the law pertaining to cannabis, with a particular focus on employee use and the employer’s rights in those circumstances. Current status of the law The delisting of cannabis and hemp plants applies to their unprocessed parts and extracts containing less than 0.2% of tetrahydrocannabinol (“THC”). Therefore only extracts that contain more than 0.2% of THC are still regulated by the Narcotics Code and require a license from the Thai Food and Drug Administration (FDA). Smoking cannabis in public remains prohibited and the maximum penalty for doing so is three-month imprisonment and a THB 25,000 fine.[1] However, in practice, the delisting has led to misuse and abuse of cannabis products in Thailand, which has in turn led to societal problems. Tourists seem to be able to readily purchase cannabis or cannabis-infused products from street vendors. Overseas governments and embassies in Thailand have issued warnings to their citizens, informing them of improper use and ensuring they do not bring any cannabis back into their home countries. There have been major health concerns, with instances of young people overdosing on cannabis. As...

Business ethics – There Is Always Some ‘Good’ in ‘Bad’ and Some ‘Bad’ in ‘Good’

September 29, 2022
Are you confused yet? Life is rarely straightforward. You can almost always find the “good” in bad circumstances and the “bad” in good circumstances….or people… or things. There is always a principle of yin and yang at play. Like anger. Anger in itself is not a bad emotion, even though we tend to categorize it as a not-so-good emotion (not in the “feel-good” category anyway). But emotions are neutral and how we respond to it is what really counts. Anger, if we let it lead us, can provoke us to stupidity or challenge us to put our foot down and finally do that great thing. We are both good and bad People too, are a myriad of both good and bad. I’ll be the first to admit that I’m not all good. I am human and there is both good and bad in me. I am good at some aspects and bad at others. I’m just glad there are others to balance me out (like my wife – thank you Kate). Yin and Yang – No shadow without light This idea of balancing comes from the principle of Yin and Yang which is a belief that “all things exist as inseparable and contradictory opposites”. Let’s think about some everyday examples – female-male, day-night and old-young. There is just something about opposites that attract and complement each other. In fact, some opposites almost depend on one another to shine. For example, there is simply no shadow without light and what is goodness without evil? Modernizing the principle The concept of yin-yang has a long history. There are many written records...