Thai regulations operate on a territorial basis. This means to be subject to Thai licensing requirements, business or activities must have at least some element taking place in Thailand. Based on this, whether and to what extent a given activity will be regulated under Thai law can be considered in light of the following conceptual scenarios:

• Purely offshore – If not a single element of the business activity takes place in Thailand, such as cases where the service provider is located outside Thailand with no presence or communication entering into or originating in Thailand, such a business activity will generally not be subject to the licensing requirements under Thai law.
  
  
• Cross-border communication – Where there is no physical presence of the service provider in Thailand, but communication (e.g., emails and phone calls) is made to or from clients or prospects in Thailand, separate consideration needs to be given to two different regulatory schemes, i.e., the FBA requirements and other business-specific licensing requirements (including securities offering regulations). From the FBA aspect, provided that there is no physical activity being conducted in Thailand, it is very unlikely that the service provider will be considered conducting restricted business in Thailand that would require a license under the FBA. From a business-specific licensing requirements aspect, where offshore business operators make no solicitation to Thailand-based clients or prospects for them to use their services or buy their products or only offer their services/products to Thailand-based clients in reliance on official exemptions, the offshore business operators will not be subject to any business-specific licensing requirements under Thai law.

• Onshore basis – Where a regulated activity is physically conducted in Thailand, the regulatory risks would substantially increase from both the perspective of the FBA and business-specific licensing requirements. Most activities conducted by foreigners or foreign entities are restricted and not permitted without a license under the FBA. Separately, whether any business-specific licensing requirement applies needs to be considered on a case-by-case basis.

There are specific exemptions from certain licensing requirements when the activity is conducted on a cross-border basis. By way of example, we wish to highlight the following regulated businesses for which there are official exemptions  ̶  investment advisory and private fund management services.

• Investment advisory
  Providing what is considered "investment advice" in the normal course of business for a fee is regulated as an investment advisory business. While a specific license is required, none is available to offshore entities. Thus, there are certain exemptions from the licensing requirement. One instance is where investment advice is given exclusively to a Qualified Institutional Investor. Another example is where an offshore investment advisor duly licensed by a securities regulatory agency that is a member of IOSCO gives investment advice to retail investors through a Thai securities company who arranges such provision of investment advice. Both of these cases are exempt from the investment advisory license.
  
  
• Private fund management
  Regulated private fund management services under Thai law is also known as discretionary investment management services. Those who manage the investment of Thailand-based investors on a discretionary basis through a segregated account under an investment mandate given by the investors are subject to private fund management licensing requirements. A relevant example of the official exemptions available is where an offshore securities business operator (duly licensed to operate a securities business by a regulatory agency of a country that is a member of IOSCO) offers and/or provides its private fund management services exclusively to a Qualified Institutional Investor.

Apart from the official exemptions discussed above, some offshore business operators adopt the practice of "reverse solicitation" as an unofficial safe harbor to provide their products or services to clients in Thailand. While this practice is neither official nor endorsed by any regulator, it is often used as an argument that the offshore operator has no intention to provide its products or services in Thailand, but rather, it is the client or investor that approaches the offshore business operator to obtain them. Therefore, in their view, the business operation should be considered as operating offshore, and the offshore business operator should not be subject to the regulatory scheme under Thai law. This practice should, however, be adopted with extreme care.