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February 17, 2021

IMPORTANCE OF GEOGRAPHICAL INDICATIONS FOR THE THAI ECONOMY

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By Mr. Julio Pingarrón

Founder of Smart Legal Solutions

Email: julio@smartlegalth.com 

Tel: +66 860945003 

According with the Thai Geographical Indications Protection Act, a Geographical Indication means a name, symbol or any other thing which is used for calling or representing a geographical origin and can identify the goods originating from such geographical origin where the quality, reputation or other characteristic of the goods is attributable to the geographical origin.

Based on the definition above of Geographical Indication, it is understood that the Thai Law in line with the international legislations, recognizes that there is a clear link between a local product produced by a particular traditional method and its original place of production, and in consequence, the qualities of that product depend on the geographic location where it has been produced.

In comparison with trademarks, the Geographical Indications protects the national intellectual and cultural heritage of the products obtained from a specific territory. In contrast, a trademark identifies a good or service as originating from a particular company or individual. 

Another important differentiating aspect is that a trademark often consists of a fanciful or arbitrary sign, but the name used as a Geographical Indication is usually predetermined by the name of a geographical area. And from a commercial point of view, a trademark is a private right that can be transferred or sold, while a Geographical Indication is a community right that cannot be sold or transferred to other parties.

Nowadays, the Thai government has recognized 151 Geographical Indications of local products spread across 76 Thai provinces, including Mae Sin tangerines from Sukhothai and Khao Hom Mali Din Phu Khao Fai Buriram rice from Buri Ram.

The Thai government aims to add 18 more products to the Thai Geographical Indication list within 2021 to generate more income for the local communities. In this regard, Vuttikrai Leewiraphan, director of the Intellectual Property Department, said the addition of the Geographical Indication certified products will help raise sales from Geographical Indication products to more than 7 billion baht in 2021.

From an international perspective, there are 17 foreign Geographical Indications products registered in Thailand, including wine from the Napa Valley in the US; tequila from Mexico; Scotch whisky from Scotland; champagne from France; Buon Ma Thuot coffee from Vietnam; Kampot pepper and Kampong Speu palm sugar from Cambodia; and Brunello Di Montacino wine from Italy.

An international Geographical Indication applied for protection in Thailand shall have an obvious evidence indicating that it is a Geographical Indication protected under the law of its home country and the protection is continuously valid until its application date for the legal protection in Thailand.

In the other hand, there are six Thai local products with Geographical Indication registered in foreign countries: Thung Kula Rong Hai hom mali rice, Doi Chaang coffee, Doi Tung coffee and Sangyod Muang Phatthalung rice in the EU, indigenous Isan silk yarn in Vietnam and Lamphun brocade silk in India and Indonesia.

In conclusion the main key benefits of the Geographical Indications for the Thai economy can be summarized in the following three points:

  1. Make consumers aware of the reputation and qualities of a product in relation to its place of origin.

  2. An important source of incomes for local communities and manufacturers.

  3. Avoid the unlawful appropriation or commercial exploitation of products that are native to a particular territory without providing fair financial compensation.

August 7, 2020

Proposed law amendment to facilitate the process of setting a business in Thailand

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By Mr. Julio Pingarrón

Founder of Smart Legal Solutions

Email: julio@smartlegalth.com 

Tel: +66 860945003 

In order to encourage the creation of new companies and improving the Thai business climate in Thailand, on June 2020, the Thai Cabinet introduced an Amendment to Thailand’s Civil & Commerce Code to facilitate the process for setting and conducting a business in Thailand. The enactment of these amendments to the law is still pending the approval of the Thai Parliament.

These law amendments are intended to provide greater flexibility for company registration process and also allow the use of technology for the corporate operations. The main points of the proposed amendments to the Thai Civil and Commercial Code are as follows:

Facilitate the company registration process and corporate changes

As a measure to speed the registration process, the private companies could submit their applications for registration and subsequent corporate changes at any approved Department of Business Development office, regardless of the location of the company.

Approval of company decisions by electronic meetings

In order to facilitate and formalize the company decisions-making, the private companies would be allowed to conduct shareholders and directors meetings by electronic means.

Minimum number of company promoters and shareholders

The minimum number of promoters and shareholders required to incorporate a Thai limited company could be reduced from three to only two.

Shareholders’ meeting quorum

A minimum of two shareholders would be required to attend the shareholders meetings, either in person or by proxy.

Mergers

In contrast to the concept of “amalgamation” recognized by the law, whereby a new company is formed through the integration of two or more entities. The draft amendments introduce the concept of “merger”, whereby a company may absorb another existing entity by taking over all its company’s assets, human resources, etc.

Dividends payment timeline

The proposed amendment sets a limit of one month for companies to make their dividends payments from the approval date at the relevant meeting.

February 12, 2020

Legal Protection of Foreign Investment in Thailand

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By Mr. Julio Pingarrón

Founder of Smart Legal Solutions

Email: julio@smartlegalth.com 

Tel: +66 860945003 

Since we are aware that one of the main concerns of foreign investors is the adoption of appropriate legal measures to maintain the full control over their investment, at  Smart Legal Solutions we advise our clients accordingly on the best solutions to conduct their business project in Thailand.

The Foreign Business Act B.E. 2542 is the main governing law related with foreign investment in Thailand, which limits the ability of foreigners to engage in certain activities reserved only for Thai nationals. During the past years, the Thai government has implemented some legal amendments to attract the foreign investors into Thailand. However, some legal aspects and restrictions may still represent a difficulty for foreign nationals to manage their business and/or investment in Thailand.

In this regard, we would like to show a brief overview of the main legal structures according with Thai business law for setting up a company in Thailand formed by 100% foreign ownership:

Investment Promotion Act

Under the Investment Promotion Act B.E. 2520, it was established the Board of Investment (BOI). This Thai government body is aimed to attract investment from both foreign and local entrepreneurs to conduct certain business activities eligible for promotion, which are considered as beneficial for the social and economic development of the country and the protection of the it’s natural environment.

The major advantages of registering a company in Thailand under BOI promotion include, but are not limited to: 100% foreign ownership (regardless it’s nationality), exemptions or reductions on corporate taxes, multiple work permits without the requirement of hiring four Thai employees, own a land by the company in connection with its business activity  etc.

US-Thai Amity Treaty

The US-Thai Amity Treaty provides especial benefits to American nationals who wish to establish a business in Thailand. Under this Treaty, those companies registered in Thailand which are owned by US nationals, whether corporate or individual persons, can be exempted from most of the foreign investment’s restrictions from the Foreign Business Act. That is why nowadays, the Amity Treaty is the preferred way for most American nationals, who are intended to set up a new company in Thailand.

The Treaty allows US nationals to form a company in Thailand by 100% US ownership, since according with the Treaty, at least the 51% of the company shares must be held by American nationals and the majority of directors with authorized signature must be American citizens. However, it should be noted there are still certain activities which are restricted, such as fiduciary functions, operating in the field of banking, land ownership etc.