Thailand’s Draft Startup Promotion Act

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Thailand’s Draft Startup Promotion Act: A New Framework for Innovation and Investment

Thailand is taking a major step toward strengthening its innovation economy with the introduction of the Draft Startup Promotion Act, a proposed law designed to remove long-standing barriers that hinder the growth of early-stage, technology-driven businesses. If enacted, the legislation will become the country’s first dedicated legal framework for supporting startups—a move that signals Thailand’s ambition to compete more effectively with regional innovation hubs.

Objectives of the Legislation

The Draft Startup Promotion Act seeks to modernize the legal environment surrounding startups by addressing issues that make it difficult for early-stage companies to raise funds, structure shareholding arrangements, or scale their operations. The law aims to:

Foster a thriving ecosystem for innovation-led businesses
Strengthen Thailand’s competitiveness in the regional tech and innovation landscape
Streamline legal and regulatory processes that historically created friction for founders and investors

By establishing clearer rules and targeted benefits, the Act is poised to significantly improve the business environment for startups at both local and international levels.

Who Qualifies as a Certified Startup?

A central feature of the Act is the creation of a certification system for startups. To obtain this status, companies must meet several conditions:

Incorporated as a limited company in Thailand
Not older than 10 years from the date of registration
Annual revenue not exceeding 300 million THB on average over the past three years
No history of paying dividends to shareholders
Not controlled by another company—except eligible startups or university-affiliated innovation entities
Required to apply and renew certification annually

Certified startups will be listed on an official public registry, giving them formal recognition and access to special legal benefits.

Key Benefits for Certified Startups

The legislation provides certified startups with unprecedented flexibility in managing capital structure and fundraising—a significant departure from the constraints typically faced under existing Thai corporate law.

Fundraising Advantages

Simplified ability to offer shares or debt securities to the public
Permission for startups to repurchase up to 20% of their own shares
Flexibility to convert preferred shares into common shares, supporting more dynamic financing structures
Capability to issue new shares through debt-to-equity conversion, reducing cash flow burdens and aiding restructuring

Duration of Benefits

Most certified startups will enjoy benefits for 5 years after approval
Deep-tech, agricultural-innovation, or high-impact technology startups may qualify for extended support of up to 10 years

These provisions aim to make the startup environment more attractive for both domestic and foreign investors by encouraging earlier, more diversified financing options.

Administrative Oversight and Support

The National Innovation Agency (NIA) is designated as the primary authority responsible for administering the Act, acting as a one-stop service center for certification, support, and coordination. A dedicated Startup Promotion Committee will oversee strategic implementation, ensuring alignment across multiple regulatory bodies.

Together, these entities will help reduce bureaucratic hurdles and create more consistent support channels for founders and investors.

Opportunities and Risks for Stakeholders

For Investors, the Act introduces several benefits that make Thailand more attractive as an investment destination:

Enhanced liquidity and flexibility due to improved share structuring options
Greater clarity in corporate governance, reducing transaction risk
Stronger long-term opportunities in deep-tech and frontier technologies, supported by extended benefits

For Founders, they will gain access to legal tools that are essential for startup growth:

Flexible capitalization, including debt conversion and treasury shares
A clearer pathway to public fundraising, creating more avenues for expansion
Credibility gains through official certification backed by a national innovation agency

With regard to the risks and considerations, despite the advantages, some challenges remain:

Certification must be renewed annually, meaning benefits can be lost if criteria are not maintained
The Act does not automatically include tax incentives, requiring coordination with separate tax policies
Compliance obligations may increase administrative workloads for startups
Thailand’s broader exit ecosystem, beyond M&A and regional expansion, remains in development

The Draft Startup Promotion Act represents a significant milestone in Thailand’s journey toward building a sustainable and competitive innovation ecosystem. By offering legal flexibility, clearer guidelines, and structured support, the Act promises to empower early-stage companies and attract greater investment from both domestic and global markets.

If passed into law, the legislation could serve as a catalyst that accelerates Thailand’s transition into a leading regional hub for innovation, technology, and entrepreneurship.

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