17 June, 2017
The Thai government has passed legislation that imposes more stringent rules and regulations to protect consumers from business operators engaging in direct sales and direct marketing. The amendments to the Direct Sales and Direct Marketing Act (No. 3), B.E. 2560 (2017) were published in the Government Gazette on May 17, 2017. When they enter into force 120 days after the publication date, the amendments will not only change the definition of “Direct Marketing,” but will also significantly alter the direct sales and direct marketing practices and provisions prescribed in the previous legislation. The key amendments to the Act are outlined below.
New Requirements for Direct Sales Registration
A business applying for direct sales registration must be a partnership with a minimum registered capital of THB 500,000; or a limited company or a public limited company with minimum registered and paid-up capital of THB 1,000,000.
Direct sale operators must be jointly liable to consumers who purchase goods or services from their independent distributors.
New Requirements for Direct Sales and Direct Marketing Registration
Applicants are required to provide a guarantee to the registrar in the amount prescribed by the Ministerial Regulation.
Applicants must not have had their direct sales and direct marketing registration revoked within a period of five years prior to the application submission date.
Operators must notify the registrar of any office relocation within 15 days from the relocation date.
Operators must prepare a sale and purchase document for goods or services in Thai which is easy to read and understand. The document must contain at least: (1) the name of the buyer and the seller; (2) the sale and purchase date; (3) the delivery date; and (4) the rights of the consumer to terminate the contract, whereby such termination right must be specifically stated so that it is visibly clearer than the other general information.
Managing partners, managing directors, directors, or any persons who are responsible for the operation of the direct sales business must not have prohibited qualifications as stipulated under the Act, such as: (1) being declared bankrupt; (2) being adjudged to be incompetent or quasi-incompetent; or (3) being imprisoned by a final judgement, except imprisonment for negligence or misdemeanors.
Any transfer or cessation of business operations must be approved by the registrar.
Violations of these provisions may result in imprisonment, fines, and/or a revocation of the registration. Furthermore, directors, managers, or any persons responsible for the business of the violating company may also be liable for punishment for stated offenses.
The amendments provide a transition period for operators who have already been registered for direct sales and direct marketing activities. These operators must comply with all requirements within the prescribed time frame stipulated under the new amendments—otherwise, their registrations may be revoked.
For further information, please contact:
Kobkit Thienpreecha, Partner, Tilleke & Gibbins
kobkit.t@tilleke.com
