In Thailand, Section 10 of the Life Insurance Act, B.E. 2535 (1992), as amended, and Section 9 of the Non-Life Insurance Act, B.E. 2535 (1992), as amended (collectively the Insurance Acts) permit life and non-life insurance companies in Thailand to request for a relaxation to increase its foreign shareholding ratio to more than 49 percent and to increase its foreign directorship proportion to more than half; provided that the insurance companies have been granted specific permissions from the Minister of Finance (the MOF), upon the recommendation of the Office of Insurance Commission (the OIC).

Under the Insurance Acts, the MOF may grant such permission only under the following three circumstances:

(1) it would improve the insurance company's standing or operations, which exists in such a state that may cause damage to the insured or the public;

(2) it would enhance the stability of the insurance company; or

(3) it would enhance the stability of the insurance industry as a whole in Thailand.

The MOF recently announced the Notification re: criteria, procedures, and conditions for non-Thai persons to hold more than 49 percent of the total voting shares sold, and for non-Thai directors to comprise more than half of the total number of directors, which provides the criteria for seeking the MOF's permission under the conditions in (2) and (3) above (the MOF Notification).

The MOF Notification becomes effective from the date of announcement in the Royal Gazette, which is 18 January 2017.

Key Aspects of the Notification

Permission to Increase the Foreign Shareholding Ratio and Directorship Proportion

Under the MOF Notification, the MOF will grant permission to allow non-Thai shareholders to hold more than 49 percent (and up to 100 percent) of the total voting shares sold, and non-Thai directors to comprise the majority of all directors of the company.

Whereas the MOF's permission granted for the purpose of rectifying the insurance company's financial distress is granted up to 10 years, there is no specific time period imposed under the MOF Notification. However, the MOF (with the OIC's recommendation), may impose a time period on the permission.

Qualifications of the Insurance Company

In order to seek the MOF's permission, the insurance company must meet the following qualifications:

(1) have a capital adequacy ratio (CAR) at the level required by the respective regulation on the calculation of the capital fund; and

(2) have a business plan for enhancing the stability of the insurance company and enhancing the overall stability of the insurance industry.

Qualifications and Capabilities of the Non-Thai Shareholders

The non-Thai shareholders seeking to obtain the MOF's permission must have the following qualifications and capabilities:

(1) at least ten years' expertise and experience related to or supporting insurance business;

(2) financial and operational stability, whereby the non-Thai shareholder or its parent company must receive at least an A rating from a recognized international credit rating agency, as well as having the business operation network at the international level;

(3) policy for the business operation and a concrete plan for the transfer of technology and expertise in order to develop management systems and to enhance the business potential and competitive capabilities; and

(4) the capability to provide financial support in order to allow the company to implement the business plan.

Procedure in Applying for the MOF's Permission

The insurance company must submit the application for the MOF's permission, together with comprehensive supporting documents, through the OIC. Thereafter, the OIC will pass the respective application to the MOF within 90 days from the date it receives the completed documents. Then, the MOF, on the recommendation of the OIC, will consider and notify the insurance company of its decision within 90 days from the date the MOF has received the completed application with all required documents.

Conditions for MOF's Permission

Once the MOF grants its permission, the insurance company and/or the non-Thai shareholder will be subject to the following requirements/conditions:

(1) The insurance company must have total capital available (TCA) of not less than Baht 4 billion (approximately US$113 million) in case of life insurance company and Baht 1 Billion (approximately USD 28 million) in case of non-life insurance company, at all times during its business operation.

(2) The change of the shareholding ratio held by a non-Thai shareholder who has been granted permission from the MOF must be subject to the following conditions:

      (i) in case of a change in the shareholding ratio of non-Thai shareholders of 5% or more, the insurance company must report to the registrar (OIC) within 30 days from the date of change; and

      (ii) in case of a change in the shareholding ratio of a non-Thai shareholder (who has been granted the permission from the MOF) results in other non-Thai shareholders (who have not been granted the permission from the MOF) holding 20% or more of the total shares, the insurance company must request permission from the MOF.

(3) A non-Thai shareholder (who has been granted the permission from the MOF) and entities under the same group of such non-Thai shareholder will not be permitted to operate an insurance business in Thailand, either through a branch of a foreign insurer or by holding shares in other licensed insurance companies in Thailand. This means that upon the MOF's permission being granted, the non-Thai shareholder will be subject to a single presence policy.  Please note, however, that such a person would still be permitted to invest in a mutual fund or other forms of business similar to a mutual fund; provided that such investments are not for the purpose of circumventing the single presence rule.

(4) The insurance company will be able to distribute dividends only when the insurance company has fully implemented the business plan submitted to the MOF, in particular, plans related to the transfer of technology and expertise, human resources and capital fund management.

Deemed MOF's Permission for EBT or Amalgamation Transaction

If an insurance company that has been granted a permission from the MOF pursuant to the MOF Notification undergoes an entire business transfer (EBT) or an amalgamation, and the contemplated transaction results in the target insurance company having a foreign shareholding ratio of more than 49% or a foreign directorship ratio of more than half, it will be deemed that such target insurance company has been granted the permission from the MOF, for a temporary period, for the purpose of the EBT or amalgamation.


This MOF Notification provides further clarification and guidelines for the application to increase the foreign shareholding and directorship proportions in insurance companies. Foreign investors seeking to invest in insurance companies in Thailand may now take advantage of these relaxations on foreign shareholding restrictions.

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