Page 52 - Social Enterprise A New Business Paradigm for Thailand

1.8 Social Business under Thai Law
Under the Social Enterprise Promotion Act, B.E. 2562 (2019), the legal use of the term “social

enterprise” in Thailand applies to two types of entities: (1) social enterprises that do not intend
to share profits with partners or shareholders, and (2) social enterprises that do intend to share
profits, provided they maintain a primary social mission.

To qualify for legal recognition, an organization must meet the following operational criteria:

1. Social Purpose Requirement The organization must have a primary mission to promote
employment for individuals in need of special support, address or develop communities,
society, or the environment, or advance public interest in areas designated by the Minister.

2. Revenue Requirement At least 50% of the organization’s revenue must come from the sale of
goods or services. An exception applies to social enterprises that do not intend to distribute
profits; these may earn less than 50% from commercial activities, subject to the criteria,
methods, and conditions specified by the relevant committee.
3. Profit Allocation Requirement No less than 70% of profits must be reinvested toward
achieving the social mission outlined in item (1). No more than 30% of profits may be
distributed to owners or shareholders. Investments used to expand production or services
that align with the social mission, under committee-defined conditions, are also recognized
as valid reinvestments toward social objectives.

4. The enterprise must demonstrate compliance with good governance principles.
5. The enterprise must not have had its status as a registered social enterprise revoked, unless
a period of at least two years has passed since the date of application for reinstatement or for
support under this Act.
6. No partner, board member, authorized representative, or shareholder holding 25% or more
of shares may have held a similar role in an enterprise previously deregistered under item (5),
unless they can demonstrate that they had no involvement in the misconduct that led to

deregistration. (Senate Standing Committee on Commerce and Industry, 2024)

The following types of entities are eligible to register as social enterprises under the Social
Enterprise Promotion Act:

1. Non-profit organizations, or entities that do not distribute income among members, as
defined under the Civil and Commercial Code, such as associations and foundations.
2. Member-based organizations, established for the benefit of their members, such as
cooperatives and community enterprises. For-profit organizations, or entities that distribute
income among members, including partnerships and limited companies. Further details
regarding the rights and privileges granted to registered social enterprises are presented in

Chapter 4.

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