By Chandler MHM Limited

On 30th January 2018, the Ministry of Industry issued a new notification regarding prohibited actions for foreigners; “Notification of the Ministry of Industry re: Prohibition of Actions which are by Nature, a Mining Business When Taken Over by a Foreigner, and the Prohibition of the Submission of an Application for a License Beneficial to Another Person B.E. 2560 (2017)” (the “Notification”).

The purpose of the Notification, as stated in the preamble, is to prohibit foreigners from operating mining businesses through the use of “cover up” schemes in order to conceal ultimate foreign ownership.

The Notification prescribes 3 major provisions as follows:

1. As provided in Clauses 3 and 4, foreigners are prohibited from initiating a “business takeover”. Note that the notification itself does not alter the definition of “Foreigner” under the Foreign Business Operations Act B.E. 2542 (1999). Instead, it prescribes the definition of the term “business takeover”.

A business takeover means “having the control, power or influence, whether directly or indirectly, by a foreigner in determining the policy, management, operations, appointment of directors or high-level executives which may result in undermining the business management of a company. Having such control, power, or influence may be achieved through; 1) the holding of shares with voting rights as expanded from one half of the total number of voting rights to control of the majority votes in a shareholders meeting, or 2) by the appointment or removal of directors from one half of all directors”.
Actions that can be constituted as affecting a business takeover and which are thus prohibited, include the following:

  • business takeover through a nominee;
  • business takeover through a special voting right;
  • business takeover through the control of power;
  • business takeover through the source of investment;
  • business takeover through a contract related to intellectual property or a contract which renders the exclusive right to a foreigner or juristic person in an affiliate, and such contract results in the transfer of the cost and remuneratory benefit to the foreigner;
  • business takeover through a procurement agreement and management agreement;
  • business takeover through a joint operation agreement, and
  • business takeover through transfer pricing

2. Clause 5 of this Notification prescribes that submission of an application for a license beneficial to another person having the following characteristics is prohibited:

  • Being a nominee for submitting an application for a mining lease under the law on minerals;
  • Being a nominee for submitting an application for a license for minor-scale mining, or minor-scale mining for another person or for the benefit of another person; and
  • Being a nominee for reporting of mineral panning for another person or for the benefit of another person.

3. In Clause 6, applicants and holders of a license are required to self-certify. Self-certification under this Notification applies to both license applicants and current holders.

  • License, according to this Notification, means a prathanabat, (a mining lease under the law on minerals), i.e. a license for minor-scale mining and for reporting of mineral panning under the law on minerals; and
  • This “self-certification” process is meant to ensure that license applicants and holders do not undertake any actions which are contradictory to this Notification. This means that applicants and operators must certify that they are not involved in any cover up schemes.

Conduct contradictory to this Notification may result in the cancellation of a license application or revocation of a license.

However, this Notification is silent as to how its provisions would be implemented with regard to existing licensees. Thus, it remains to be seen whether existing licensees will be required to comply with this Notification forthwith, or upon the renewal of their licenses.

As these regulations will have an impact on the mining business in Thailand, operators may want to seek consultation in light of this new Notification.

Chandler MHM Limited
7th-9th, 12th and 16th Floors
Bubhajit Building
20 North Sathorn Road
Bangkok 10500, Thailand

This article is intended to highlight an overview of key issues for ease of understanding, and not for the provision of legal advice. If you have any questions about this publication, please contact your regular contact person(s) at Mori Hamada & Matsumoto or Chandler MHM Limited, or any of the Key Contacts listed in the far-right column.

Related Articles by Firm
New regulation on the prohibition of sales of alcoholic beverages online
In line with evolving trends in technology, certain entrepreneurs and retailers have started using online channels to sell alcoholic beverages, which makes it difficult to ensure the sale of such beverages is in accordance with existing laws ...
Nok Air Rehabilitation Proceedings – Updates for Creditors and Lessors
As the global travel industry continues to grapple with the effects of COVID-19, many companies are now beginning to seek protections under various insolvency regimes ...
Thai data privacy act exemptions
A cabinet resolution has approved a draft Royal Decree on temporary exemption of PDPA enforcement for some organisations and businesses.
Procurement of power from community-based power projects
These projects are intended to help generate and distribute income to local communities and promote their participation in local power projects.
Updated standards for e-meeting security
The Emergency Decree requires that electronic meetings follow the security protocols set forth under a notification from the Ministry of Information and Communication Technology.
Waste to energy projects in Thailand
A brief overview of the legal issues related to the development of a municipal solid waste to energy project.
Scrutinising CP Group’s acquisition of Tesco
The decision of Thailand’s competition authorities will set a precedent regarding merger control and provide clarity on market definitions.
PPP projects in Thailand’s EEC
Thailand will continue to aggressively move forward with legislation that streamlines implementation of important PPP projects. This legislative trend presents new opportunities for foreign and local investors alike, with a focus particularly in Thailand’s infrastructure sector ...
Community-based power projects in Thailand
A feed-in tariff scheme for power generated by community-based projects has been approved.
Thailand Plus incentives under BOI
The two new incentives encourage companies to move from overseas to Thailand.
Thailand’s OTCC issues first industry-specific conduct guidelines
Guidelines on the conduct between wholesale and retail business operators and their trade partners announced by the Office of Trade Competition Commission.
Amendment to the Consumer Protection Act 
The Act strengthens the law relating to the safety of products and services.
Personal Data Protection Act published in the Government Gazette
Business operators should ensure that their businesses comply with the PDPA.
Amendment to Thai Arbitration Act
The Amendment expands the ability of foreign arbitrators and representatives to act in arbitral proceedings.
Update on Stamp Duty regulating electronic transactions
A new notification requires parties who enter certain electronic transactions to pay stamp duty in cash.
Ministerial Regulation removing back office services from the Foreign Business Operations Act announced
Certain back office service businesses will no longer require a foreign business licence.
Developments in Thai M&A
Corrupt practices, environmental breaches and merger filing are becoming more significant priorities for clients ...
Thailand: Projects and Energy
Commentary on the latest developments in the Thai projects and energy sector ...
Secondary laws under the Trade Competition Act BE 2560
The enactment of these five Notifications represents a significant leap of progress.
Thailand Update: Amendment to Work Permit Law
In response to criticism, the government decided to amend the Emergency Decree on Managing of Foreigners with relaxed penalties ...
Leasing of residential buildings − A contract-controlled business
The Contract Committee of The Consumer Protection Board recently announced a new Notification which designates the lease of residential property as a “contract-controlled business”.
Mergers and acquisitions in Thailand
A number of factors are making Thailand a target of choice for international and regional investment ...
Thailand Anti-Corruption Update
National Anti-Corruption Commission Guidelines to Supplement Section 123/5 of the Organic Act on Counter Corruption ...
Amendment to the Thai Civil and Commercial Code
Part IX: Combination of Limited Companies ...
Thailand: Amendment to the Public Company Act
The National Council for Peace and Order has considered the lack of clarity on conditions, procedures and time limitations related to the laws governing business operations ...
Thailand: The Act on the Amendment to the Civil Procedure Code (No. 30) B.E. 2560 (2017)
There are a number of amendments to the current Civil Procedure Code (CPC) as part of its legal execution ...
Projects & Energy Special Report: Thailand: New Minerals Act
A new Minerals Act (BE 2560 (2017) was published on March 2, 2017 and took effect on August 30, 2017 (180 days after the publication date) ...
Thailand: ERC Announcement - Purchase of Electricity From Hybrid-Renewable Energy Small Power Producers
The Energy Regulatory Commission (ERC) issued an invitation to bid for the sale of electricity from Hybrid-Renewable Energy Small Power Producers (SPP) on 4 August 2017 ...
Thailand: New Amendment to the Labor Law
The Labor Protection Act B.E. 2541 (“LPA”) was first enacted in February 1998; the LPA has been amended several times ...
Thailand: Extension of the Reduced VAT Rate
Value added tax (VAT) is an indirect, non-cumulative, consumption tax levied on the supply of goods or provision of services in Thailand ...
Thailand: Ten year visa extension
Due to the rapidly increasing number of foreign senior-citizens seeking Thailand as a retirement destination, Thailand’s Cabinet recently approved the ten-year retirement visa extension ...
Thailand: The New Trade Competition Act
On 24 March 2017, the National Legislative Assembly (the “NLA”) in Thailand passed the final reading of the draft Trade Competition Act ...
Thailand: Amendment to BOI Act to create new BOI benefits
The Thai government has recently been promoting “Thailand 4.0”, which refers to creative and innovative industries ... as a master plan to pull Thailand out of the middle-income trap and toward becoming a high-income country ...
Energising Thailand’s M&A sector
With a focus on the energy and natural resources sector, Chandler & Thong-ek Partner Ratana Poonsombudlert answers our questions on Thailand’s M&A present and future
Related Articles
IHC Magazine: April 2024 issue featuring Firms of the Year 2023 Results
As we round off the first quarter of this year, we are proud to showcase our IHC Firms of the Year for 2023. These firms have been selected by our IHC community in recognition of their invaluable contribution to their clients’ ...
Related Articles by Jurisdiction
Thailand: Ten year visa extension
Due to the rapidly increasing number of foreign senior-citizens seeking Thailand as a retirement destination, Thailand’s Cabinet recently approved the ten-year retirement visa extension ...
Thailand is no Cloudy for Cloud
This note highlights the law and investment promotion applicable to cloud computing services in Thailand.
Thailand: Projects and Energy
Commentary on the latest developments in the Thai projects and energy sector ...
Latest Articles