Thailand New PEA Restrictions on Change of Control and Transfer of Name Aimed at Data Centers and Industrial Users
The Provincial Electricity Authority (the "PEA") has issued a new regulation (the "PEA Regulation") imposing restrictions on changes in control and transfers of electricity user rights for certain electricity users, including data center operators and large electricity consumers with high electricity demand ("Users").
Background and the affected electricity users
The PEA Regulation aims to ensure that electricity allocation and usage rights are utilized by the intended high-capacity project operators and to prevent speculative transfers of electricity rights following the allocation of electricity supply capacity. The PEA Regulation became effective on 5 June 2026 and applies to:
1) Data center projects connected to the PEA network at a voltage level of 69 kV or above; an
2) Users using electricity at a voltage level of 69 kV or above and large industrial consumers with substantial electricity demand using electricity at a voltage level of 69 kV or higher and have dedicated transformer installations with a combined capacity of 75 mVA or more.
Restrictions under the PEA Regulation
1. Restrictions on the changes in control in the electricity users
Article 5 of the PEA Regulation prohibits a User from transferring shares during the first three years following the commencement of actual electricity consumption, unless the original shareholders as set out in the original application to PEA maintain more than 50% of the total shares in the User.
Notably, the PEA Regulation does not define the concept of a "change in control". Instead, the relevant provision focuses solely on changes in direct shareholding of Users and requires the original shareholders to retain more than 50% of the issued shares in the User. The PEA Regulation also does not address other mechanisms of control, e.g. the rights to appoint or remove directors, shareholders' arrangements.
2. Restrictions on the transfers of Users' names
2.1. In case of projects that have not yet commenced electricity consumption or have commenced electricity consumption for less than three years
Pursuant to Article 6 of the PEA Regulation, where the electricity user has not yet commenced electricity consumption or has been consuming electricity for less than three years, a transfer of user rights may only be permitted in limited circumstances, i.e. the transferee must be an entity registered in Thailand and conducting the same type of business as the transferor and one of the following conditions must be satisfied:
(a) Intra-group Transfer: As of the transfer application date, the original User, as transferor, must hold more than 50% of the shares in the transferee and must continue to maintain such shareholding for at least three years following completion of the transfer.
(b) Conversion into a Public Company: Where a private limited company converts into a public limited company, the resulting public company may become the User.
(c) Amalgamation: Where the transferor amalgamates with another juristic person to form a new entity, the shareholders of the original User must collectively hold more than 50% of the shares in the amalgamated entity.
2.2. In case of projects which have commenced electricity consumption for more than three years
Once a User has consumed electricity for more than three years, a transfer may be permitted provided that the transferee continues to operate the same type of business as the transferor.
Pursuant to Article 7 of the PEA Regulation, the transferee will assume all rights and obligations under the existing electricity sale and purchase agreement and must satisfy applicable PEA requirements, including placing security to the PEA as required.
PEA may require the submission of supporting documents and evidence in connection with any proposed transfer or change in control. Where PEA determines that the relevant requirements have not been satisfied, it may require corrective action within 180 days. If the non-compliance is not remedied within the prescribed period, PEA reserves the right to suspend electricity supply or terminate the relevant electricity sale and purchase agreement, pursuant to Article 10 of the PEA Regulation.
Key considerations for stakeholders in the projects
The PEA Regulation may have significant implications for corporate structuring, mergers and acquisitions, and project financing transactions involving data center projects or other projects with high electricity consumption.
From an M&A perspective, the PEA Regulation may affect acquisitions of shares or mergers during the lock-in period, as well as the way in which transactions are structured, including whether they are implemented as share acquisitions or asset transfers.
The PEA Regulation should also be considered when planning exit strategies, including exits through a real estate investment trust (REIT). While a direct transfer of the electricity user or a change in its shareholding during the lock-in period may be restricted, a sale-and-leaseback structure may remain feasible where the original electricity user continues to occupy and operate the facility under a lease arrangement and remains the contracting party under the electricity supply agreement. In such circumstances, the transfer of the underlying real property to the REIT would not, in itself, breach the restrictions under the PEA Regulation.
From a financing perspective, a typical security package in a project financing transaction includes security over shares and rights under the electricity supply agreement. The PEA Regulation does not prohibit the enforcement of any share pledges typically seen in project financing transactions for data centers. However, any such enforcement may risk the suspension of power supply or termination of the power supply agreement.
Also note that where the rights and obligations under the electricity supply agreement are transferred, a new guarantee must be provided by the transferee following the transfer.
Given that non-compliance with the PEA Regulation may result in the suspension of electricity supply or the termination of the relevant electricity sale and purchase agreement, stakeholders should consider the implications of the PEA Regulation at an early stage when structuring their corporate organization, investment, and financing arrangements. For existing and ongoing projects, lenders, sponsors, and other stakeholders should also review their current corporate and financing structures, as well as the relevant transaction documentation, to assess whether any adjustments are required.
