Joint Ventures 2025 Comparisons

In 2025, Thailand has had a drastic change in terms of tax perspectives by enacting the Emergency Decree on Top-up Tax, B.E. 2567 (2024) (the “Decree”). The Decree, which shall be applied to large multinational enterprises (MNEs) with consolidated financial statement revenues of at least EUR750 million, may promote long-term investment and prompt a reassessment of investment in Thailand, including joint ventures (JVs) or alternative arrangements, since the top-up tax will be levied in accordance with the global minimum rate. From the foreign investors’ perspective, the Decree also resolves the issue in relation to cross-border tax competition.

Apart from the tax perspective, given the current economic downturn in Thailand, businesses across various sectors are facing financial difficulties and challenges in achieving their operational targets. This has led to many companies seeking partnerships to strengthen their position, enhance competitiveness, share resources, and manage costs more efficiently by pooling expertise and capabilities.

At the same time, financially strong companies may take this opportunity to acquire or enter into joint ventures with struggling businesses, anticipating future growth or recovery. As the share prices of many companies have significantly declined, financially capable buyers can acquire businesses at lower-than-usual prices or purchase larger equity stakes, thereby increasing their ownership or control.

Consequently, mergers and acquisitions (M&A) have become a notable trend in recent work, whether in the form of share acquisitions, asset purchases, business mergers, or joint ventures, with an increasing focus on combining technical know-how, market access, and operational expertise to create stronger, more resilient business structures.

The manufacture of electric vehicles (EVs) has, with a strong sense of sustainable growth, significantly become a booming industry to watch in Thailand. This momentum is largely being driven by government initiatives that include both tax and non-tax incentives designed to lower manufacturing costs, leading to the fact that Thailand is an attractive destination for foreign investors to set up manufacturing facilities in relation to EVs.

Recent figures highlight this positive trajectory. Between January and June 2025, registrations of new battery-powered electric vehicles (BEVs) totalled at 57,289 units, a 52.4% increase compared with the same period a year earlier, representing 15% of all newly registered passenger cars. By the end of May 2025, the total number of BEVs on the road reached 280,600 units, up 60.1% year-on-year.

Emerging Technologies

Emerging technologies such as artificial intelligence (AI) and data management systems play a vital role in advancing and enhancing efficiency within the electric vehicle industry. For instance, AI is increasingly used in controlling the manufacture, analysing data from sensors installed in electric cars as well as managing supply chains.

For JVs formed to operate in the electric vehicle sector, it is essential to carefully consider and clearly agree on the type and structure of the JV. Particular attention should be given to intellectual property rights related to the technologies and software used in the electric vehicles as well as the responsibilities of partners in the case where AI or automated systems malfunction such as failures in driver’s assistance systems or battery management.

Currently, Thailand is in the legislative process of creating an AI Act aimed at raising ethical standards for AI use, ensuring respect for rights and promoting accountability.

Thailand does not have specific legislation governing joint ventures. However, joint ventures can generally be classified into two main types:

• Unincorporated Joint Venture (UJV) – a contractual arrangement without separated legal entity under the Thai Civil and Commercial Code (CCC), although recognised as a tax unit under the Thai Revenue Code.
• Incorporated Joint Venture (IJV) – a separate legal entity distinct from its participants. In Thailand, this is most established as a private limited company under the CCC.

Both JV types have advantages and disadvantages depending on factors such as tax treatment, legal liability, regulatory compliance, and other considerations, which will be discussed further.

The choice between UJV and IJV in Thailand is influenced by several key factors:

• The purpose of the JV – for example, if the JV is incorporated to be participating in government tenders, such JV shall be an incorporated joint venture (juristic person) under the laws of Thailand.
• The commercial terms and structure agreed between the JV participants and whether they align better with a contractual arrangement or a separate legal entity.
• The intended duration of the JV.
• Available tax benefits or incentives.
• The legal status of the JV and the corresponding liability structure.

Risk sharing is generally the primary consideration in selecting an appropriate JV vehicle. From a liability standpoint, a UJV, while treated as a separate tax unit, lacks separate legal entity, meaning its participants are jointly and unlimitedly liable (ie, jointly and severally liable) to third parties, including for any tax liabilities. In contrast, an IJV, typically established as a private limited company, is also treated as a separate tax unit from the JV participants and provides limited liability protection, restricting participants’ exposure to the amount of their unpaid capital. This structure is generally more advantageous for managing external claims and liabilities, in particular the potential tax debts.

Tax Considerations

For income tax purposes, both a UJV and IJV are treated as separate tax units with similar tax obligations. The key differences affecting the choice of JV vehicles in the tax treatment of profit distribution are the distribution of the dividend and of the profit sharing.

An IJV distributes its profits through dividends. A Thai-incorporated corporate shareholder that holds at least 25% of the IJV’s shares for a minimum period of three months before and after the dividend payment, and without any cross-shareholding, is exempt from corporate income tax on such dividends. Foreign shareholders are subject to a 10% withholding tax; however, the rate of withholding tax may lower when there is a double taxation agreement.

A UJV distributes its profits through profit sharing. Profit shares paid to Thai-incorporated companies or to foreign companies, which conduct any other business in Thailand and participate in the JV, are fully exempt from income tax, regardless of the investment proportion or holding period.

There is no specific primary regulator for UJVs. JV parties have contractual freedom to determine management arrangements. However, a UJV is treated as a tax unit under the Revenue Code, which means that the UJV itself is required to register with the tax authorities and comply with all applicable tax laws and obligations.

An IJV is primarily regulated by the Department of Business Development, Ministry of Commerce (DBD). In addition, the management and governance must comply with the CCC, along with any applicable sector-specific regulations.

Thailand’s anti-money laundering (AML) framework is governed by the Anti-Money Laundering Act B.E. 2542 (1999), along with regulations on customer due diligence (CDD) and know your customer (KYC) procedures. The Anti-Money Laundering Office (AMLO) serves as the primary regulatory authority, overseeing enforcement, investigations, and compliance guidance. AML obligations apply to both financial institutions and designated non-financial businesses such as real estate agents, gold traders, and digital asset providers, all of which are required to verify customers, identify ultimate beneficial owners (UBOs), and report suspicious or large-value transactions to the AMLO.

In terms of national security, Thailand does not maintain a dedicated domestic sanctions regime. However, Thailand has acted in compliance with the UN Sanctions List. In addition, Thai financial institutions shall refuse to engage with sanctioned individuals or entities to avoid compliance and reputational risks.

Both IJVs and UJVs are under the Foreign Business Act B.E. 2542 (1999) (the FBA). The FBA serves as the primary legal framework restricting certain business activities that foreigners are, in principle, prohibited from conducting. The FBA sets out the procedures in case foreigners wish to operate such businesses provided that such foreigners fulfil the requirements and act in compliance with the procedures under the FBA.

In addition to the FBA, certain business sectors are subject to shareholding restrictions under other relevant laws. For example, the banking and non-life insurance industries require at least 75% Thai ownership. However, this 75% ownership requirement may be subject to exemptions or relaxations granted by the respective regulatory authorities on a case-by-case basis.

Thailand’s Trade Competition Act B.E. 2560 (2017) (the TCA), enforced by the Office of Trade Competition Commission (OTCC), may apply to joint ventures depending on their structures and purposes. If a JV’s formations or operations significantly reduce market competition, create a monopoly, or result in market dominance, the JV participants must comply with the requirements under the TCA. Certain JV formations that could substantially lessen trade competition must be notified to the OTCC within seven days of such completed formation, while those creating a monopoly or market dominance require prior approval before proceeding. Non-compliance can lead to severe consequences, including fines, invalidation of the transaction, and other enforcement actions.

When the JV participant that is a listed company makes an investment in a joint venture, the listed company is obligated to disclose such transaction in accordance with the regulations of the Stock Exchange of Thailand (SET), as the investment constitutes a material transaction that may have an impact on the listed company’s share price.

Furthermore, such investment may be considered an acquisition of assets by the listed company and/or may be regarded as a connected transaction if it involves transactions with persons connected to the listed company. In such cases, disclosure obligations and/or other actions prescribed by the rules of the SET must be complied with.

Ultimate beneficial owner-related (UBO-related) disclosures are a core part of the country’s anti-money laundering (AML) and Bank of Thailand (BOT) regulatory framework. Under the Ministerial Regulation on Customer Due Diligence 2020 and the Anti-Money Laundering Office (AMLO) guidelines issued pursuant to the Anti-Money Laundering Act B.E. 2542, financial institutions must identify and verify both the customer and the UBO before entering into a business relationship or carrying out certain transactions.

This requirement applies not only when opening a bank account but also when engaging in qualifying transactions with a bank, such as significant fund transfers, financing arrangements, or other activities that trigger customer due diligence obligations. The process includes assessing the customer’s risk profile and determining the appropriate level of verification based on that risk. The rule applies to both IJVs and UJVs, ensuring transparency in ownership and control, mitigating financial crime risk, and aligning Thailand’s financial sector with international AML standards.

In Thailand, UJVs are not governed by specific legislation; however, the precedent case has characterised them as unregistered partnerships, holding that UJV participants are jointly liable as joint debtors.

In 2025, the Supreme Administrative Court issued Order No 318/2568 (2025), offering another perspective on UJV litigation rights by affirming that each UJV participant retains the independent right to bring legal lawsuits. In that case, the three UJV participants had entered into a UJV to share profits from a joint business without registering as a partnership or company. They jointly filed a lawsuit, but one participant later terminated the JV agreement and withdrew from the case. The Court held that this withdrawal did not affect the rights of the remaining two UJV participants to pursue the claim individually.

During the pre-JV agreement stage, the JV participants commonly enter into documents at the negotiation stage, such as the following.

• Memorandum of understanding (MOU) to outline the preliminary understanding and commercial framework.
• Non-disclosure agreement (NDA) to protect confidential information exchanged between JV participants during discussions.
• Letter of intent (LOI) to record the JV participants’ intentions and key commercial terms.

At the pre-JV stage the common market-standard provisions commonly include:

• a clear statement of the JV’s objectives and intended scope;
• confidentiality obligations;
• exclusivity rights for a defined period; and
• the governing law and dispute resolution framework.

In Thailand, the disclosure of a JV depends on the status of the company (ie, whether it is a listed company) and the nature of the transaction. For a listed company, disclosure may be required once the transaction is confirmed. In practice, a listed company should disclose the transaction when board approval is granted (if required) and upon entering into a binding agreement.

In Thailand, the conditions precedent in JV agreements typically include:

• obtaining required regulatory approvals (eg, the licensing requirements under specific laws, or BOI (board of investment) approvals);
• execution of ancillary agreements (eg, IP licences, asset transfer agreements, and service agreements);
• fulfilment of capital contribution requirements or other agreed funding arrangements; and
• clearance of any existing encumbrances on assets to be contributed to the JV.

The satisfaction of these conditions is usually a mutual obligation, but specific items may be allocated to one party.

Material adverse change and force majeure clauses usually permit the following:

• a material adverse change clause generally allows a party to terminate or delay closing if a significant negative change occurs in the other party’s financial condition, business operations, or the JV’s target business before completion; and
• force majeure clauses typically excuse delays or non-performance caused by events beyond the parties’ control, such as natural disasters, war, pandemics, or government actions – in JV agreements, force majeure clauses can also be linked to extensions of long-stop dates or temporary suspension of obligations.

In Thailand, there is no specific legislation governing UJVs, and therefore no minimum capital requirement applies. For IJVs incorporated as private limited companies, there is similarly no minimum capital requirement; however, under the CCC, at least two shareholders are required, the minimum par value per share is THB5, and each shareholder may hold any number of shares. If a foreign shareholder is involved, the minimum capital requirement under the FBA is THB3 million.

Activity-specific capital requirements must also be considered, as certain regulated activities impose their own minimum paid-up capital thresholds; for example, a cryptocurrency or digital token exchange centre must have at least THB100 million in paid-up capital, while a non-life insurance business must have at least THB300 million in paid-up capital.

In Thailand, the primary governing document for UJVs is the joint-venture agreement, which sets out the JV participants’ rights and obligations, capital or asset contributions, profit-sharing arrangements, management structure, and dispute resolution mechanisms.

For IJVs, in addition to the joint-venture agreement, the articles of association (AOA) and a shareholders’ agreement are typically executed to govern matters such as the relationship between shareholders, board composition, procedures for the appointment and removal of directors, share transfer restrictions, and exit mechanisms.

The key terms commonly addressed in a joint-venture agreement are:

• objectives and business activities;
• shareholding structure;
• board composition;
• appointment and removal of directors;
• voting rights;
• management authority and reserved matters;
• profit, loss, and dividend allocation;
• share transfer restrictions;
• exit mechanisms;
• confidentiality obligations;
• non-compete undertakings;
• dispute resolution procedures; and
• governing law and jurisdiction.

In UJVs, decision-making is governed solely by the joint-venture agreement, which outlines the management structure, decision-making procedures, and voting rights of each participant, and since there is no statutory framework regulating these matters, it is essential that the agreement be drafted comprehensively to address all potential scenarios that may arise.

In IJVs, decision-making is governed by the company’s constitutional documents, including the AOA and any shareholders’ agreement, and for matters not covered in these documents, the applicable procedures under the CCC will apply.

In Thailand, a UJV is typically funded directly by the JV participants through capital contributions or partner loans in agreed ratios. All initial and future funding obligations are purely contractual, set out in the joint-venture agreement. As a UJV is not a separate legal entity and has no share capital, ownership and control are determined solely by the contractual terms.

IJVs, generally formed as private limited companies, are funded through capital increase and/or shareholder loans. The shareholders may also agree to raise additional capital through mechanisms permitted by Thai law, such as issuing bonds.

Under the CCC, capital increases are generally required to be offered to all shareholders in proportion with their existing shareholdings, so that if all shareholders exercise their rights to subscribe for the new shares, the shareholding proportions will remain unchanged. However, if the JV participants have agreed in the joint-venture agreement on a mechanism for future equity funding, such agreement will be binding on them. Where such funding leads to changes in the participants’ shareholding proportions, the joint-venture agreement should clearly set out how related provisions, such as those concerning the right to appoint directors, will be amended to reflect the adjusted ownership structure.

Deadlocks in joint ventures in Thailand are typically resolved through mechanisms pre-agreed in the joint-venture agreement. Deadlocks occurring at the board level (or similar level) of both IJVs and UJVs are usually addressed by similar approaches, such as exercising the casting vote, referring the matter to a shareholders’ meeting (or similar level) for consideration and resolution, or appointing a neutral third party (mediator) to facilitate negotiations and help reach a settlement.

However, deadlocks arising between JV participants in IJVs and UJVs tend to be resolved differently. UJVs commonly rely on frequently used deadlock resolution methods such as third-party conflict resolution, buy-sell mechanisms, forced buy-outs, or voluntary winding up. In contrast, UJVs may not be able to utilise all these methods due to their status as non-legal entities. Therefore, deadlock resolution in UJVs primarily focuses on the joint-venture agreement, specifying how to manage the rights and obligations arising within the joint venture if the partners fail to reach an agreement.

The specific documentation required depends on the terms of the investment. In some cases, a JV participant may contribute intellectual property, tangible assets, or rights in such assets as part of its capital contribution.

For IJVs, Thai law permits share subscriptions to be paid in kind, including with assets or intellectual property, subject to valuation and compliance requirements. Common ancillary documents include intellectual property licence agreements, asset transfer agreements, and technology transfer contracts.

Key Rights and Obligations of JV Participants

The principal rights and obligations of JV participants typically include the following.

• Profit sharing and loss allocation in accordance with the JV agreement or governing law.
• Access to information, including financial records and operational data, to ensure transparency and oversight.
• Non-compete and non-solicitation undertakings, restricting participants from engaging in competing activities or soliciting employees, customers, or suppliers.
• Obligation to contribute capital, assets, or services as agreed in the JV agreement.

Profit and Loss Distribution

UJV

• Profits are distributed as profit shares and losses allocated according to the JV agreement.
• There are no statutory requirements governing the allocation, giving parties contractual flexibility.

IJV

• Profits are distributed as dividends in proportion with shareholdings unless otherwise specified in company’s AOA.
• Losses are borne in proportion with shareholding.
• The CCC prescribes that shareholder returns are made through dividends, capital reductions, or distribution upon dissolution.

Liabilities for Debts and Obligations

UJV

• Thai court precedent treats UJVs as unregistered partnerships, meaning participants are jointly and unlimitedly liable for the debts and obligations of the JV, including tax liabilities, regardless of internal allocation arrangements.

IJV

• Shareholders’ liability is generally limited to unpaid capital.

The typical ways for a minority member of the JV to protect their interests include the following.

UJV

• Protections depend entirely on the JV agreement, as there is no statutory framework.
• Common provisions include reserved matters requiring unanimous or majority consent for key business decisions.

IJV

Minority shareholders benefit from both statutory rights and contractual protections as follows.

• Statutory rights under the CCC, such as the ability of shareholders holding at least 10% of shares to call a shareholders’ meeting.
• Contractual rights typically agreed in the shareholders’ agreement or AOA, which may include:
1. tag-along rights, allowing minority shareholders to sell their shares on the same terms if a majority shareholder sells its stake;
2. share transfer restrictions, requiring consent or rights of first reversals before shares are sold to third parties; or
3. reserved matters, requiring super-majority or unanimous approval for significant corporate actions.

International Joint Ventures

In Thailand, JV participants may choose a foreign governing law under the JVA (joint-venture agreement) provided it does not conflict with Thai public order or mandatory provisions, such as restrictions on land ownership or labour laws. However, the IJV registered in Thailand remains subject to Thai corporate law regardless of the chosen governing law. If a dispute is litigated before a Thai court, the party relying on foreign law bears the burden of proving its content to the court’s satisfaction.

Courts as a Venue for Resolving Disputes

Foreign JV members rarely select Thai courts due to the fact that proceedings are conducted solely in Thai and often consume a large period of time. The primary exception arises when the counterparty holds assets in Thailand, allowing for direct enforcement of a Thai court judgment against those assets.

Failure to Agree on the Applicable Procedural Law

A Thai court cannot apply any procedural law other than Thai procedural law; parties therefore cannot agree to use a different procedural law for court proceedings in Thailand. In arbitration, if the parties fail to agree on the applicable procedural law and the seat of arbitration is in Thailand, the arbitral tribunal will apply the Thai Arbitration Act B.E. 2545 (2002). This Act is based on the UNCITRAL Model Law, although Thailand is not a contracting state to that instrument.

Alternative Dispute Resolution (ADR) Procedures

Thailand does not have a statutory requirement mandating ADR before commencing court proceedings or arbitration, and there is no legal requirement to mediate prior to arbitration. However, Thai law encourages mediation, and government agencies actively promote its adoption to achieve more efficient dispute resolution.

International Treaties Regarding Dispute Resolution

Thailand is a signatory to the New York Convention (1958), which allows for the recognition and enforcement of foreign arbitral awards. Thailand is also party to multiple bilateral investment treaties (BITs), free trade agreements (FTAs), and ASEAN dispute settlement mechanisms, many of which provide for arbitration in investor–state disputes.

Enforcement of Foreign Judgments or Arbitral Awards

Foreign court judgments are not directly enforceable in Thailand; they may only be introduced as evidence in fresh legal proceedings before a Thai court. By contrast, foreign arbitral awards are recognised and enforceable under the New York Convention and the Thai Arbitration Act B.E. 2545 (2002). To enforce an arbitral award, an application must be filed within three years of the award becoming binding, accompanied by certified copies of the award and arbitration agreement with Thai translations. The applicant must also show that no statutory grounds for refusal exist, such as an invalid arbitration agreement, lack of proper notice, excess of scope, procedural defects, or violation of Thai public policy.

The board structure is typically determined by the JV agreement and the company’s AOA. It is common for each JV participant to have the right to nominate directors in proportion to its shareholding or as otherwise agreed between the parties.

The appointment and removal of directors must comply with the CCC unless otherwise provided under sector-specific laws, the AOA, or the JV agreement.

Under the CCC, weighted voting rights may be applied by granting the chairperson of the board a casting vote in the event of a tie. However, JV participants are free to agree otherwise by expressly providing different voting arrangements in the JV agreement and AOA.

In the case of an IJV, the board of directors has the power and duty to manage the company in accordance with its stated objectives, its AOA, and the resolutions of the shareholders’ meeting.

Where a director also holds a position or owes duties to the JV participant that appointed them, Thai law requires the director to act in the best interests of the company rather than in the interests of the appointing shareholder. In situations of conflict, the director’s fiduciary duty to the company takes precedence, and decisions must be made in good faith, with care and loyalty to the JV entity.

Under the CCC, the board may delegate certain functions to individual directors or subcommittees. However, court precedents have clarified that attendance at board meetings is a personal duty of each director and cannot be delegated or performed by another person on the director’s behalf.

Regarding reporting obligations, under the CCC the board must prepare and present the financial statements at the shareholders’ meeting.

For UJVs, the duties of the board and the reporting requirements to the participants should be clearly set out in the joint-venture agreement, which is normally modelled on or reflects the principles under the CCC.

Under the CCC, directors are prohibited from engaging in any business of the same nature as, and in competition with, the company’s business, unless such conduct is expressly approved by the shareholders’ meeting.

In the event of competing business activities, mechanisms to manage conflicts of interest (COI) may be implemented, such as entering into a non-compete agreement, clearly delineating the scope of each party’s business operations, and establishing measures to prevent the use of inside information for personal benefit.

Key IP Issues That Should Be Considered When Setting Up a JV Corporate Entity

When setting up an IJV, the JV participants should clearly define important terms that align with the IJV’s goals and the nature of its business activities. The key issues that the JV participants need to agree on should include at least the following.

• Capital contributions involving intellectual property (IP), where JV participants may contribute IP rights as part of their investment by transferring ownership or licensing the IP to the IJV.
• Management and protection of IP, including defining who is responsible for registering, enforcing, and defending the IP rights.
• Ownership of existing IP brought into the JV, as well as any new IP created during the JV’s operation.
• How IP will be handled if the JV ends, such as agreeing on independent valuation methods to fairly divide IP and avoid disputes after termination.

Key IP Issues That Should Be Considered in Contractual Collaborations

For a UJV, the JV participants should agree on key IP issues similarly to an IJV. Since a UJV does not have a corporate entity to hold IP rights, the ownership of the IP can be agreed to belong to any one of the JV participants or to all of them jointly. If the IP is owned jointly by all JV participants, all JV participants shall have co-use, and if there is any dispute it will be considered and interpreted under the principle of ownership.

Dealing With IP Issues in the JV Agreement

The parties shall expressly agree on the ownership, usage rights, and management of IP. In the event of any dispute or issue arising, the enforcement shall be governed by the terms mutually agreed upon by the parties regarding IP management, dispute resolution, and the governing law. In the absence of such agreement, the matter shall be governed by the relevant laws applicable to the subject matter.

Specific Considerations for the Transfer of Intellectual Property to or From Foreign Entities

Thai intellectual property law permits the free transfer of IP rights between foreign and domestic entities, provided that such IP remains within the term of protection prescribed by law. IP registered in a foreign jurisdiction will not be protected under Thai law unless it has been registered with the Department of Intellectual Property (DIP) of Thailand.

However, in recognition of the importance of trade mark protection and registration, Thailand has acceded to the Madrid Protocol. As a result, trade marks registered in Thailand are protected in other member countries, and trade marks registered in member countries are likewise protected in Thailand, provided that registration is carried out in accordance with the Madrid Protocol.

Under Thai intellectual property law, IP such as patents and trade marks may be assigned in ownership as prescribed by law, or the rights therein may be granted for use to another party.

An assignment means the complete transfer of ownership in the IP from the original owner to another person. Once the transfer is completed, the original owner no longer retains any rights over such IP.

A licence means that the rights-holder grants permission to another person to use the IP while ownership remains with the rights-holder. Such permission may stipulate the scope of use, duration, and territorial limits. Unless it is specified as an exclusive licence, the rights-holder may grant the same rights to multiple parties.

The decision between assignment and licensing is often determined by the parties’ intention to maintain long-term control, generate ongoing revenue, or transfer the IP entirely as part of a capital contribution to a joint venture or as part of an exit strategy.

The Importance of ESG

ESG stands for environmental, social and governance. Nowadays, society places great importance on, and is highly aware of, ESG because it helps organisations adapt and compete rapidly in the market, enhances confidence among consumers and investors both domestically and internationally, and promotes long-term sustainability for businesses through efficient resource use and fair, equitable human resource management.

Recent Significant Court Decisions or Legal Developments Relating to ESG/Climate Change

Labour rights are a key part of the social dimension within the ESG framework, reflecting a strong commitment to social responsibility and sustainable business practices. Thai labour laws have been steadily evolving to improve worker protections and promote fairness in the workplace. For instance:

• In 2023, amid the COVID-19 pandemic, Thai labour law was updated to address work-from-home arrangements by granting employees the “right to disconnect”, allowing them to refuse work-related communications from their employers after working hours or once their tasks are completed. This change supports employee wellbeing and helps maintain a healthy work–life balance, which is a vital aspect of social sustainability.
• More recently, the House of Representatives approved a new draft of the Thai labour law that extends maternity leave for female employees from 98 days to 120 days. The legislation also permits spouses to take up to 15 days of leave to support their partner after childbirth. These measures encourage shared family responsibilities and foster a more inclusive workplace culture.

These developments highlight how reforms in labour law align with ESG principles by promoting a fair, supportive and sustainable working environment.

Implementing Measures in Connection With ESG

JV participants and the JV entity should take careful and proactive steps to implement ESG-related measures. The scope and nature of these measures depend on the type of business and applicable legal requirements. For example, JVs operating in sectors such as mining or power generation are often legally required to conduct environmental impact assessments (EIAs) or environmental health impact assessments (EHIAs) to evaluate and mitigate environmental risks.

In addition, JV participants and the JV entity may need to comply with ESG principles even if such requirements are not explicitly mandated by local law. For instance, JVs exporting certain finished products to the European Union must adhere to due diligence obligations, including providing certifications that their products are not linked to deforestation or forest degradation. Failure to comply with these requirements may result in legal penalties or export restrictions under the EU Deforestation Regulation.

The Main ESG Regulations in Thailand and the Impact of International Policies and Scenarios

At present, Thailand does not have dedicated legislation specifically addressing ESG. However, ESG concepts are integrated into several existing laws, including labour regulations that establish minimum employee rights, and environmental laws requiring permits, impact assessments, and public hearings for activities that affect the environment. However, the Securities and Exchange Commission (SEC) and SET supervise listed companies, issuing guidelines encouraging transparent ESG reporting and responsible business practices.

On the global stage, Thailand’s ESG framework is shaped by internationally recognised standards like the Task Force on Climate-related Financial Disclosures (TCFD) and the Global Reporting Initiative (GRI), as well as growing pressure from responsible investors. This drives Thai companies to enhance their ESG reporting and management practices to remain competitive and attract investment.

UJV

A UJV terminates in accordance with the conditions specified in the JV agreement. Upon termination, the JV must notify the Area Revenue Office or Branch Area Revenue Office within 15 days from the date of cessation of operations, prepare final accounts, and distribute any remaining profits to the JV participants.

IJV

An IJV may terminate as stipulated in the JV agreement or under the CCC. For a private limited company, termination may occur when:

• the company was incorporated for a fixed term and that term has expired;
• the company was formed for a single specific purpose and that purpose has been achieved;
• shareholders pass a special resolution to dissolve;
• the company becomes bankrupt; or
• the court orders its dissolution upon the occurrence of a specific circumstance such as when the company has a sole shareholder.

UJV

Key considerations in transferring assets between JV participants include ensuring clear legal ownership and title, determining a fair valuation of the assets, assessing all relevant tax implications, obtaining necessary regulatory approvals, and addressing any other applicable legal or contractual requirements.

In addition, since contributing assets to a UJV may create encumbrances or obligations over those assets during its operation, it is important to address how such encumbrances will be managed or discharged upon the dissolution of the UJV.

IJV

Key considerations in transferring assets between JV participants in an IJV are similar to those applicable to a UJV. However, all assets, whether originally contributed to the IJV or generated by the IJV itself, shall remain the sole property of the IJV.

Differences between assets originally contributed to the JV by participants and assets generated by the JV itself are that the assets originally contributed to the UJV remain the separate property of each JV participant, whereas assets generated by the UJV are jointly owned by the participants in proportion with their respective ownership interests.

Statutory Provisions Impacting on the Exit of Members

For the exit of a UJV’s participants, there is no specific legislation governing such exit. Exit terms are determined entirely by the JV agreement or by the operation of law upon the dissolution or loss of legal capacity of a JV participant.

During the exit of an IJV’s participants, the share transfers are subject to the CCC and the company’s AOA. Restrictions on share transfers are permitted if specified in the AOA.

The share buy-back mechanism under Thai law is permitted only for public limited companies and is subject to the conditions prescribed by law. The JV participants are generally free to agree on exit mechanisms in the JV agreement, provided these do not conflict with mandatory provisions of Thai law.

The most common JV exits in Thailand for UJVs include termination clauses under the JV agreement, negotiated withdrawals, and compensation payments, as there are no shares to transfer. For IJVs, common exit methods include share transfers to existing or new shareholders, put and call options, drag-along and tag-along rights, or sales to third parties.