Thailand has significant potential to become a regional hub for the sports industry in Southeast Asia, covering a wide range of activities, including sporting events, training facilities, fitness and wellness businesses, sports sponsorship and marketing, athlete management, and the commercial exploitation of sports-related rights. However, establishing and operating a sports business in Thailand requires careful consideration of various legal and regulatory requirements.
Our law firm in Thailand, Herrera and Partners H&P, has prepared some legal comments on licensing and structuring sports businesses in Thailand. For entrepreneurs seeking to establish or expand a sports business in Thailand, particularly foreign investors, incorporating a company alone may not be sufficient. The shareholding structure, scope of business activities, specific licensing requirements, and employment of foreign personnel are all important matters that should be considered from the outset.
Determining the Business Model and Corporate Structure
The first and most important step is to clearly identify the nature and scope of the proposed business activities. Sports businesses may encompass a broad range of activities, including sports facility management, sporting event organization, sports coaching and training, fitness and wellness services, the sale of sports equipment and merchandise, sports marketing and sponsorship services, and athlete management.
Where foreign investors are involved, it is important to determine whether the proposed activities fall within the scope of the Foreign Business Act B.E. 2542 (1999) (FBA). If so, the business may be required to obtain a Foreign Business License (FBL) or adopt an alternative corporate and investment structure that permits the proposed activities to be conducted lawfully in Thailand.
Determining the appropriate structure at an early stage is therefore essential, as it may affect the shareholding arrangement, management control, capital requirements, contractual rights, and the company’s ability to conduct its intended activities in Thailand.
Licensing and Sector-Specific Requirements
There is no single license that covers all types of sports businesses. The applicable licensing requirements depend on the nature, scope, and actual operations of the business.
For example, fitness centers and exercise facilities may be subject to requirements concerning premises, building regulations, safety standards, and permitted use of the premises. Businesses providing healthcare or sports medicine services may also be subject to additional regulations governing healthcare facilities, medical professionals, or health-related products.
Similarly, businesses organizing sporting competitions, large-scale events, or activities involving public venues may need to obtain specific approvals or comply with requirements imposed by the relevant authorities. Additional licenses or regulatory requirements may also apply where the business sells food, beverages, or other products as part of its operations.
For this reason, investors should consider preparing a licensing matrix before commencing operations. This should identify the relevant licenses and approvals, the responsible regulatory authorities, applicable conditions, and the appropriate entity under which each activity should be conducted.
Foreign Investment Considerations
For sports businesses involving foreign investment, the proposed shareholding structure and the company’s ability to conduct its intended activities should be carefully reviewed from the beginning.
Where foreign shareholders hold 50% or more of the shares, the company may be regarded as a “foreigner” under the FBA. Depending on the nature of its business activities, certain activities may be restricted or may require an FBL before operations can commence.
In practice, several structures may be considered, including investment through a Thai-majority company where legally permissible, obtaining an FBL, or relying on applicable investment privileges or international agreements.
The use of nominee shareholders to circumvent foreign ownership restrictions is not an appropriate structure and may expose both the company and the parties involved to significant legal risks.
For larger investment projects, or projects involving activities eligible for investment promotion, investors may also consider applying for incentives from the Board of Investment (BOI). Depending on the promoted activity, BOI promotion may provide benefits relating to foreign ownership and the right to conduct certain business activities in Thailand, subject to the applicable criteria and conditions.
In addition, U.S. investors may benefit from the Treaty of Amity and Economic Relations between Thailand and the United States, which may, subject to applicable requirements and procedures, allow qualifying U.S.-owned companies to enjoy certain treatment similar to Thai companies and maintain majority or even 100% U.S. ownership in eligible businesses.
Corporate Establishment and Business Operations
Beyond sector-specific licensing, the corporate structure should be designed to reflect the company’s actual business operations. Key considerations include registered capital, shareholding arrangements, directors’ authority, management rights, and agreements among shareholders.
Where a project involves multiple investors, particularly in a joint venture structure, a Shareholders’ Agreement should be considered to clearly regulate management rights, voting arrangements, capital contributions, share transfers, minority shareholder protections, and mechanisms for resolving potential disputes.
Sports businesses should also pay close attention to intellectual property rights. Where the business uses team names, logos, trademarks, photographs, or an athlete’s name, image, or likeness, the relevant intellectual property and commercial rights should be properly documented.
Contracts should clearly specify the scope, duration, territory, and permitted uses of such rights to minimize the risk of future disputes and ensure that the business has the necessary rights to commercially exploit its sports-related assets.
Employment and Foreign Athletes
Sports businesses employing foreign athletes, coaches, trainers, managers, or other specialists should ensure that the relevant immigration and work authorization requirements are satisfied before such individuals commence activities in Thailand.
The nature of each individual’s activities should be assessed on a case-by-case basis. Entering Thailand as a tourist does not, by itself, authorize an individual to work or provide services in Thailand.
In addition, employment or service agreements with athletes, coaches, trainers, or team managers should carefully address matters such as remuneration, duties and responsibilities, contract duration, termination rights, confidentiality, intellectual property, and rights concerning the individual’s name, image, and likeness.
Conclusion
Operating a sports business in Thailand requires consideration of significantly more than simply incorporating a company. Investors should assess the full scope of their proposed activities from the outset and determine whether they involve the FBA, sector-specific licensing, premises and building regulations, employment and immigration requirements, or intellectual property considerations.
For foreign investors in particular, establishing an appropriate business structure at the outset can help minimize legal risks and avoid the need for costly restructuring at a later stage. The analysis should take into account the proposed shareholding structure, management and control rights, applicable licensing requirements, and any available government investment incentives, while ensuring that the structure accurately reflects the company’s intended business operations.
Accordingly, before commencing a sports-related project in Thailand, investors should consider conducting a legal and licensing review to assess the appropriate corporate structure, required licenses, regulatory obligations, and potential investment incentives on a case-by-case basis. This approach can help ensure that the business operates lawfully and efficiently while providing a solid foundation for future growth and expansion.
At Herrera & Partners, we have extensive experience advising foreign investors on sports-related businesses in Thailand, including corporate structuring, regulatory requirements, licensing, and investment considerations. We work with investors to develop practical and legally compliant structures tailored to the specific nature of each business.
If you are considering establishing or expanding a sports business in Thailand and require legal or regulatory guidance, please do not hesitate to contact us via email at info@herrera-partners.com
