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Thailand’s Draft Startup Act: What Cabinet Approval Means for Fundraising andInvestment
Thailand’s proposed Startup Act could give qualifying startups greater flexibility to raise capital, structure investments and offer employee equity.
On 8 September 2026, the Cabinet approved in principle the draft Startup Business Promotion Act (“STARTUP ACT”), marking a further step towards a dedicated legal framework for startup businesses. Cabinet approval does not itself bring the proposed reforms into force.
For companies and investors, the key questions are which businesses will qualify, how the new financing mechanisms will operate, and what conditions will apply throughout an investment.
Who would qualify?
The framework reported following Cabinet approval would be voluntary. Its principal eligibility criteria include:
Incorporation as a limited company for no more than 10 years.
Average annual revenue over the preceding three years not exceeding THB 300 million.
No previous dividend payments.
Restrictions on control by another company.
Eligible companies would submit an electronic self-certification application to the National Innovation Agency (NIA).
The corporate-control criterion requires particular attention. Section 19 of the 2025 consultation draft included exceptions for control by another recognised startup company and certain companies established by higher education institutions to commercialise research and innovation. The recent summaries do not explain whether these exceptions have been retained. For corporate investors and university spin-offs, the final definition of control and any exceptions could therefore determine access to the scheme.
How could startup fundraising change?
The proposed reforms aim to address restrictions on limited companies that do not fully accommodate the financing instruments and investment arrangements commonly used by startups internationally. Recent reporting identifies six measures:
Convertible debentures: debt that converts into shares under agreed conditions, offering flexibility where an early-stage valuation is difficult.
Debt-to-equity conversion: converting existing debt into share capital.
Preference share conversion: allowing preference shares to convert into ordinary shares under investment arrangements.
Vesting: allowing rights to shares to accrue over time or upon meeting agreed conditions.
Treasury shares: enabling qualifying companies to hold their own shares for allocation to directors, employees or investors.
Share offerings and debenture issuance: expanding financing options, subject to implementing rules.
For counsel, the practical significance lies in how these mechanisms would operate together. Investment agreements, company articles and employee share plans would need to align on approvals, allocation and conversion terms, and the treatment of unvested rights when an employee leaves.
The recent updates do not specify the detailed conditions or restrictions applicable to the six proposed measures. These remain to be clarified as the bill progresses and implementing rules are developed.
What support would NIA provide?
NIA would serve as a central point for startup recognition, support and coordination with other agencies. Its announcement describes a five-year benefit period, potentially extended to a total of 10 years for qualifying deep-tech businesses, alongside support relating to tax, foreign specialists, intellectual property and government procurement.
What should companies and investors consider now?
The proposal raises three issues for transaction planning.
Eligibility may affect investment structure. If the final framework retains restrictions on corporate control and dividend history, ownership arrangements and distribution decisions could affect qualification. These matters should form part of due diligence before parties assume access to the scheme.
Recognition may involve continuing obligations. The consultation draft contemplated annual self-certification and Thai staffing requirements, with removal from the scheme for specified failures. Counsel should monitor whether these obligations survive and consider how investment documents should address compliance and loss of eligibility.
Implementation will determine the value of the reforms. Shareholder agreements, company articles, conversion provisions and employee equity plans will need to work together under the final legislation. Parties should also consider what happens if recognition expires or is lost before a planned conversion or share allocation.
The proposed Startup Act signals meaningful progress towards a more flexible investment framework. For transactions being negotiated now, however, documents should distinguish arrangements available under existing law from mechanisms dependent on future legislation, and provide for implementation only once the necessary legal conditions are satisfied.
This article draws on the announcements of 8 September 2026 and the 2025 consultation draft. References to specific draft provisions describe the earlier consultation version and remain subject to revision.
Written by
Manaswee Wongsuryrat
Partner
Supati Saicheua
Associate
