The extra incentives for Thai startups and venture capital via the changes of regulations

Many startups were excited about the current military government promises to provide extra incentives for startups and venture capital via the changes of regulations since the beginning of the year. Many have been waiting for tangible development since then but little has been done, beside planning and talking, until recently.

Even though it is another discussion but it is a form of tangible development as the National Startup Committee, led by the Finance Ministry has agreed to propose amendments to the Civil and Commercial Code to the Cabinet in order to allow startups to allocate convertible debentures to investors. It is a semi-tangible development at best since no date was given of when the proposal will be made.

The proposal will include allowing startups to offer employee stock options to their staff to encourage them to work at their offices while the general details of the amendments that will be proposed to the Cabinet are as follows:

1. Opening channel for startup to transform its debenture to convertible debenture
2. Allowing startups to offer employee stock options to their staff
3. Allowing startup’s employees to buy stock options at a set price
4. Allowing for the amendment of rights in preferred shares

The amendment to allow startups to allocate convertible debentures to investors is an important foundation which could lift the standard of Thailand startups to match with that of Singapore as it would help facilitate investors that wants to invest in startups.

The National Startup Committee also urged the Stock Exchange of Thailand (SET) to set up a new tier to widen funding options for startups. The Ministry of Finance (MOF) said the SET may need to establish a new bourse as the qualifications for the SET and Market for Alternative Investment (MAI) are difficult for startups to meet. Meanwhile, the MAI said the bourse is considering easing listing requirements to facilitate the listing of startups.

Extension of tax waiver for venture capital (VC)

The MOF is set to extend a five-year tax waiver for venture capital investment in startups which was set to expire at the end of 2016. The Fiscal Policy Office is currently working out the details of the extension's length before proposing to the Cabinet. No date was given of when that will be.

The MOF is also mulling on extra measure to support the merging and acquisition between startups and large corporate while relating agencies are currently studying up on the qualifications of startups that have the potential to go public where the new guideline should be done by next year.

The TeachSauce team welcome the government development to support startups and venture capital via changes in regulations and we hope to continue to be a part that help with the development of startups in Thailand.