Mergers and acquisitions in Thailand are governed by a composite framework of laws, combining corporate, competition, foreign ownership, tax, and sector-specific regulations. While Thailand does not have a unified M&A code, transactions are structured primarily under the Civil and Commercial Code (CCC), Public Limited Companies Act B.E. 2535 (1992), Securities and Exchange Act B.E. 2535, and Trade Competition Act B.E. 2560 (2017). Foreign investors must also navigate the Foreign Business Act B.E. 2542 (1999), which limits participation in certain sectors.
This article explores the legal mechanisms for M&A in Thailand, distinguishing between asset and share acquisitions, mergers under company law, and amalgamations, along with a review of regulatory approvals, transaction structuring, and legal risks.
Civil and Commercial Code (CCC) – Governs general private companies (limited companies), contract law, and amalgamation procedures.
Public Limited Companies Act (PLCA) – Applies to public companies and listed firms, including tender offers, board resolutions, and shareholder protections.
Securities and Exchange Act (SEC Act) – Overseen by the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET); applies to public M&A, disclosures, and takeovers.
Foreign Business Act (FBA) – Restricts foreign majority ownership in certain business categories without a license or BOI privileges.
Trade Competition Act – Overseen by the Trade Competition Commission (TCC); governs merger control and market concentration risks.
Department of Business Development (DBD) – Company registrations, amalgamations, changes in shareholding
SEC and SET – Public M&A
Bank of Thailand (BoT) – M&A in financial institutions
TCC – Merger filings and approvals for anti-competition concerns
BOI – Foreign ownership exemptions and investment incentives
The most common structure involves the purchase of shares in a Thai company, resulting in a change of control. Under Thai law:
Private limited companies must register share transfers with the DBD.
Share transfers in public companies require disclosure if they cross specific thresholds (5%, 10%, etc.).
Listed company acquisitions exceeding 25%, 50%, or 75% trigger mandatory tender offer rules under the SEC Takeover Regulations.
Foreign purchasers must ensure that post-acquisition foreign shareholding does not exceed thresholds under the Foreign Business Act, unless otherwise permitted by BOI privileges or treaty exceptions (e.g., Treaty of Amity).
An asset deal involves acquiring specific assets, contracts, or liabilities of a business without purchasing its shares. It requires:
Asset transfer agreements
Government or third-party approvals (e.g., land offices, licenses)
New employment contracts or labor compliance
VAT and specific business tax implications
Asset sales exceeding 50% of a company’s total assets may require shareholder approval under the PLCA.
Amalgamation (merger of two or more companies into a new entity) is governed by Sections 1237–1243 of the CCC and applies only to private companies. Key features:
Requires special resolution (75% of votes)
Published in a newspaper for creditor objection
New company must be formed with DBD registration
This mechanism is not widely used due to complexity and inflexibility. Public company mergers follow PLCA provisions and, if listed, require SEC review.
The Foreign Business Act defines a “foreigner” as a person or entity with 50% or more foreign shareholding or majority foreign directors/shareholders. Certain businesses (e.g., retail, construction, services) are restricted unless:
A Foreign Business License (FBL) is granted
A BOI promotion certificate is secured
The company qualifies under a treaty (e.g., US–Thailand Treaty of Amity)
Foreign acquirers must analyze whether post-transaction control will breach FBA thresholds. Common risk areas include:
Nominee structures, which are prohibited
Misuse of preferred vs. ordinary shares to manipulate voting rights
Control through management agreements without ownership
Violations may result in revocation of licenses, fines, and criminal penalties.
Under the Trade Competition Act B.E. 2560, mergers and acquisitions may require:
If a merger results in a business with ≥ THB 1 billion in sales, and does not create a monopoly, parties must notify the Trade Competition Commission within 7 days after completion.
If the transaction may cause a monopoly or dominant market power (as defined by regulation), it requires prior approval.
Thresholds for control are assessed based on:
Market share
Revenue
Nature of the industry
Failure to notify or obtain approval may result in administrative fines up to 0.5% of transaction value, and potential injunctions or reversals.
Due diligence in Thai M&A follows standard international practice, but with jurisdiction-specific focus. Key areas include:
Check shareholder registers and board resolutions
Verify registered capital and shares paid up
Confirm land ownership (Chanote titles) and mortgages at the Land Office
Ensure business operations are licensed under the correct laws
Review FBL, BOI certificates, FDA permits, etc.
Verify compliance with the Labor Protection Act
Check for unpaid contributions to the Social Security Fund
Review employment contracts and severance obligations
Unpaid corporate income tax, VAT, or specific business tax
Transfer pricing compliance
Pending tax assessments or audits
Thai authorities can hold acquirers secondarily liable for prior non-compliance in asset deals under certain circumstances.
SPAs must be tailored to Thai law and include:
Conditions precedent (e.g., regulatory approvals)
Representations and warranties (especially regarding land, FBA compliance, and taxes)
Indemnities and escrow arrangements
Closing procedures and DBD filings
Escrow accounts may be used for holdbacks or deferred payment
Foreign exchange controls apply to remittances into or out of Thailand
Proper documentation must be maintained for repatriation of funds and tax clearance
Share transfers must be registered with the Ministry of Commerce
BOI approvals may require notification of ownership change
Regulatory filings with SEC, TCC, or industry-specific regulators
Labor transfer agreements if part of an asset deal
Foreign acquirers may also need to update their visa and work permit arrangements if they become directors or executives of a Thai company.
Share transfers are not subject to VAT, but may be subject to stamp duty (0.1%)
Asset sales may incur VAT (7%) and specific business tax (3.3%)
Capital gains realized by foreign shareholders may be subject to withholding tax, unless exempted by a Double Taxation Agreement (DTA)
Tax structuring is often required to ensure post-closing efficiency and treaty compliance.
M&A transactions in Thailand are governed by a multifaceted legal and regulatory framework that requires careful structuring, comprehensive due diligence, and proactive engagement with regulators. Foreign investment limitations, merger control compliance, and legal formality in share registration are central to execution. While Thailand remains an attractive market for strategic and private equity investors, successful acquisitions demand precise legal alignment, tax planning, and cultural awareness of local business norms.