The 2020 guide to cross-border financing in Thailand
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The 2020 guide to cross-border financing in Thailand

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Everything you need to know about cross-border financing in Thailand, including market trends, developments and practical tips, by Sunyaluck Chaikajornwat, Natthida Pranutnorapal and Jirapat Thammavaranucupt of Weerawong C&P

In the past, most cross-border financings involving a Thai company consisted in an offshore lender providing financing to a parent of a Thai subsidiary. This structure typically requires security to be provided by the Thai subsidiary. Recently however, several Thai commercial banks have been providing financing to subsidiaries of Thai companies established and operated abroad, for instance in Cambodia, Myanmar, Laos or Vietnam. Classic examples of this might include project financing for a power plant in Myanmar or acquisition financing for the acquisition of shares in Vietnam.

Another notable development has been in Thailand's security interest regime. The implementation of the Business Security Act BE 2558 (2015) (BSA) widened the class of assets that could be taken as security and also solved some issues with using certain types of assets as security. The BSA therefore provides Thai borrowers with more opportunities to access financing and gives lenders more effective security rights. However, this security regulation cannot currently be used in many cross-border financings, as foreign banks only qualify as security receivers under the BSA if they are lenders in a syndicated facility alongside a Thai commercial bank.

Basic framework

If a lender is a financial institution taking deposits in Thailand, it must obtain a licence under the Financial Institution Business Act BE 2551 (2008). A foreign lender simply lending cross-border does not require a licence. While fintech and funding platforms have been progressively developing in the financing market, Thailand only began the process of legalising peer-to-peer (P2P) lending in 2018, by implementing regulations that require a platform operator to obtain a permit before it operates. If a lender does not engage in a lending business (for example, a parent company which on-lends to its subsidiary), a lending licence is not required.

Security can be taken by way of mortgage, pledge or business security. The following are some key types of assets which can be placed as security:

  • Shares and debt securities: Security can be taken over shares and debt securities, both in certificated form (by way of pledge) and scripless form (by way of the use of securities as collateral under the Securities and Exchange Act BE 2535 (1992)). A pledge requires a delivery of the written instrument representing the pledged assets to the pledgee. The registration of the pledge in the issuer's share/debenture register is also required to perfect the pledge. Additional actions may be required depending on the type of security pledged. The use of listed or scripless securities as collateral involves special procedures administered through the Thailand Securities Depository Co (acting as the share registrar of Thai listed companies) and a specific securities deposit account.

  • Bank accounts, receivables, and contractual rights: Security can be taken via (i) a contractual assignment which needs to be made in writing, with a written notice of assignment given to the debtor or consent in writing obtained from the debtor; or (ii) business security under the BSA.

Following the introduction of the BSA, which came into effect in July 2016, contractual rights, inventory, intellectual property, whole businesses and all future assets can be placed as security by way of a business security agreement. Unlike a creditor that takes security by way of assignment, a creditor that accepts business security is regarded as a secured creditor under Thai bankruptcy proceedings. The business security agreement must be made in writing and registered with the business security registration office of the Department of Business Development. The BSA requires that certain prescribed details are specified in the business security agreement, such as the underlying debts and enforcement events.

Nevertheless, a foreign bank not acting through a licensed Thai branch will only be qualified as a security receiver under the BSA if it lends in a syndicated loan alongside a commercial bank licensed in Thailand.

  • Insurance policies: Security can be taken over insurance policies and generally the parties will require that the lender is named as a (sole) beneficiary in the relevant insurance policy. Additionally, an assignment agreement and business security under the BSA could also be used.

  • Real property: Security can be taken by way of: (i) mortgage, which must be made in writing and registered with the competent land office in Thailand; or (ii) business security under the BSA, under which real property used in a business (for example, a property development business) may be provided as security by the owner of a real estate project. The perfection requirements mentioned for bank accounts, receivables, and contractual rights will also apply.

  • Plant and machinery: Security can be taken by way of: (i) mortgage over machinery that has been registered with the Department of Industry; or (ii) business security under the BSA in the case of machinery used in a business. Following the implementation of the BSA, unregistered machinery can be provided as security by way of business security instead of a pledge, which has an impracticable possessory requirement. The formalities for a machinery mortgage are the same as those for a real property mortgage, as is the perfection requirement.

  • Intellectual property: Security can be taken by way of business security under the BSA. Currently, only a few business security agreements in respect of intellectual property are registered with the relevant authority. This is partly because of the complications involved with appraising the value of intellectual property.

  • Future/after-acquired property and floating charges over all assets: Under the BSA, security can be taken over future/after-acquired property and all assets of a security provider by way of a business security agreement. In addition to the perfection requirement, in the case where a whole business is provided as security, the security receiver must, when proceeding with the registration, also file the consent of the financial institution which will act as security enforcer on a default.

Lenders should be mindful of several important issues relating to the registration requirements applicable to security interests created in Thailand, including considerations over the timing, expenses and consequences of non-registration. For instance, the failure to register a mortgage – which incurs a mortgage registration fee – will result in the mortgage being void and unenforceable. Pledges of shares or certain other instruments also need to be registered in the share register of the issuing company so that they can be enforced against a third party and the issuing company.

Foreign banks only qualify as security receivers under the BSA if they are lenders in a syndicated facility alongside a Thai commercial bank

The BSA has also established a new registration regime for business security agreements, using an online registration system with the Department of Business Development. Once registered, a security receiver will be classed as a secured creditor under the Bankruptcy Act.

The security provider's consent is required to register business security agreements. Further, where certain rights are to be provided as business security under the BSA, if the security provider must obtain the consent of any person before transferring such rights to a third person, the security receiver must submit a letter from such person consenting to the transfer by the security provider of the right to a third person together with the application for registration. A written notice to or written consent from the debtor is recommended in order that the assignment or novation be enforceable against the debtor.

Although mortgages, pledges, business securities or guarantees given in respect of loans will be transferred by operation of law upon the assignment of the loans, on a novation the consent to the transfer of security is required from the third-party security provider. In the case of a mortgage and business security, it is generally recommended that the change of mortgagee and business security receiver be registered with the relevant authority following the assignment or transfer.

In the case that the security is provided by a third party, that third-party security provider would generally have the right of subrogation but in practice, this subrogation right is usually waived.

Thai law limitations

The scope of secured obligations under a mortgage needs to be carefully specified in a contract, as Thai law requires that minimum prescribed details of future obligations be clearly specified. Incomplete details may result in certain obligations not being covered by the mortgage agreement.

A universal security agreement can be used to grant security over all assets in Thailand by way of business security under the BSA.

Thai law does not allow for tiers of creditors except where mortgages are granted with different rankings (for example, first mortgage, second mortgage). Therefore, a contractual arrangement among all relevant creditors is needed to tier different classes of creditors under the same security agreement, (for example, an intercreditor agreement).

Thai law does not have the concept of a security trustee. Only the principal and agent concepts are recognised under Thai law. In practice, an agent can be appointed to enter into a security agreement and hold the security interest on behalf of the creditors, and the agent in this transaction will generally be called a security agent. However, it may be necessary for all creditors to be registered as mortgagees.


Any company can grant a guarantee, as long as giving a guarantee is permitted under its company objectives. No regulatory approval is required for giving a guarantee unless the guarantor is a majority foreign-owned Thai company, in which case a foreign business licence is required. Listed companies should consider the corporate governance rules of the Thai stock exchange.

The Thai Civil and Commercial Code (CCC) sets out some statutory limitations concerning guarantees which may affect their enforceability.

For example, the guarantor cannot agree to be jointly liable as a co-debtor with the primary debtor, unless the guarantor is a juristic person and expressly consents to that joint liability. The lender must also comply with required procedures in enforcing a guarantee. Failure to do so will affect the rights of the lender in enforcing the guarantee or in claiming accrued default interest from the guarantor. Certain provisions of the CCC cannot be excluded or varied by contract, and guarantee terms which attempt to do so will be unenforceable.


Local courts usually recognise and enforce foreign law governed contracts, if the foreign governing law is proved to the satisfaction of the Thai court and is not considered contrary to public order or the good morals of the people of Thailand. However, any judgment obtained in a foreign court will not be enforced by a Thai court and the creditor would have to start new proceedings in Thailand. Such a foreign judgment can (at the discretion of the Thai court) be admitted as evidence in new proceedings in a Thai court.

Final foreign arbitral awards can be enforced through Thai courts, provided that the award was issued in a jurisdiction that is a party to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, and subject to the requirements and provisions of the Thai Arbitration Act BE 2545 (2002).

The main factor impacting timing, when enforcing security, is the nature of the enforcement process under Thai law. A pledge must be enforced by way of public auction (or, for listed securities, sale on the stock exchange), and for mortgage enforcement, court proceedings and (save for certain exceptions) a public auction are required. Before enforcement, certain procedures are required (for example, reasonable demand notice to the debtor). According to the BSA, the enforcement procedures are, in principle, less time-consuming as they do not require court involvement, and foreclosure of the secured asset or transfer of the secured asset by the lender is permissible. However, there are currently no precedents relating to enforcement of this type of security.

Restrictions on foreign lenders depend on the type of asset. For example, in the case of mortgaged land, a foreign lender should be aware of the restriction under the Land Code which prohibits a foreign entity from owning any land in Thailand. If the security is a pledge of shares in a Thai company, it must be ascertained whether the business of the Thai company is subject to the Foreign Business Act or any specific law regulating that business which imposes foreign ownership restrictions.

Restructuring and bankruptcy

The available insolvency procedures in Thailand are bankruptcy and business reorganisation.

In relation to the former, bankruptcy proceedings may be initiated by a creditor, in normal cases, or a liquidator of a company in the case of liquidation. After the Bankruptcy Court grants a receivership order, all rights and powers relating to management of the debtor's assets and business will be passed to the Official Receiver. Thereafter, the Official Receiver will carry out its duties of determining the debtor's assets and liabilities.

It generally takes around six months for the Bankruptcy Court to issue a receivership order against the debtor, and another six months to one year before the Bankruptcy Court issues a bankruptcy order. A period of discovery and sales of the debtor's assets, generally by public auction, as well as distribution of proceeds thereof to eligible creditors, will continue on a case-by-case basis.

In order to be entitled to a claim in the bankruptcy, unsecured creditors must file a debt repayment application with the Official Receiver within a prescribed time limit.

The scope of secured obligations under a mortgage needs to be carefully specified in a contract

On the other hand, secured creditors have two options for recovery: to enforce their respective security interests that the debtor has provided prior to the receivership order, without participating in the bankruptcy process; or to file a debt repayment application for repayment in full if the creditor agrees to surrender the secured assets for the benefit of all creditors, or for repayment of only the balance of the debt remaining unpaid if it has enforced its security or agreed to have the secured asset enforced in the bankruptcy proceedings.

The business reorganisation procedure is available to a debtor that is a juristic person and can be initiated by a creditor or a government agency (involuntary case) or by the debtor itself (voluntary case).

After the Bankruptcy Court's acceptance of a business reorganisation petition, an automatic stay or moratorium will bar creditors from seeking enforcement against the debtor's assets, while the debtor can only conduct its normal business operation. Thereafter, the Bankruptcy Court may order the reorganisation of the debtor's business, and appoint a planner, proposed by the filing petitioner or elected by the creditors' meeting, as the case may be. A reorganisation plan will then be prepared by the planner. According to the plan, the creditors will be divided into classes (depending on the security they hold and the characteristics of the debts owed to them) and the terms of debt repayment to each class will be specified therein. The plan will be considered and accepted by the creditors' meeting, and, eventually, approved by the Bankruptcy Court. After such approval, reorganisation of the debtor's business, as well as repayment to the creditors, will commence pursuant to the plan.

A business reorganisation proceeding takes around one year from the filing of the petition to the Bankruptcy Court approving the plan, where there no creditor objections arise. Where here are objections, the period might be extended by another six to nine months. The implementation of the plan itself should take around five years from the date the Bankruptcy Court, this period of which can be extended twice for not more than one year each time.

Clawbacks and stay on enforcement

A transaction prejudicial to creditors of an insolvent company can be revoked by the Bankruptcy Court, provided that the beneficiary of the transaction was aware of the transaction's prejudicial nature. If the transaction occurs within one year prior to filing of petition for bankruptcy or business reorganisation, or thereafter, or is gratuitous, or the insolvent debtor receives less than a reasonable amount of compensation for that transaction, there is a rebuttable presumption that the beneficiary was aware of the prejudicial nature of the transaction.

Undue preference given to any creditor within the three-month period prior to a bankruptcy or business reorganisation petition, and thereafter, can be revoked by the Bankruptcy Court. If the beneficiary creditor is an insider of the debtor, the hardening period will be extended to a year.

Business reorganisation proceedings do provide for a moratorium on the enforcement of lender claims. An automatic stay comes into effect once the court accepts the business reorganisation petition and continues thereafter during the reorganisation proceedings. The stay prevents certain activities, for example, pursuing existing lawsuits by the creditor, filing of civil claims or action against the debtor, or enforcing security or repossessing property owned by the creditor.


Sunyaluck Chaikajornwat

Partner, Weerawong C&P

Bangkok, Thailand

T: +66 2 264 8000



Sunyaluck Chaikajornwat is a partner in the banking and finance and the mergers and acquisitions practices. He has over 15 years' experience advising major corporations, banks, real estate and investment companies in mergers, acquisitions, joint-ventures and financings in domestic and cross-border transactions throughout South East Asia. His exceptional work in advising clients was recognised in the Asia MENA Counsel Deal of the Year awards in 2016, 2017 and 2018. He obtained an LLB from Thammasat University, a B.Eng from Assumption University, and an LLM from Columbia University School of Law, United States.


Natthida Pranutnorapal

Partner, Weerawong C&P

Bangkok, Thailand

T: +66 2 264 8000



Natthida Pranutnorapal is a partner in the litigation and arbitration practice group at Weerawong C&P. She has extensive experience in corporate transactions, business reorganisation and insolvency. Natthida is recognised as a rising star in restructuring and insolvency by The Legal 500. She is the author of several publications on restructuring and insolvency in Thailand. Natthida obtained an LLB from Thammasat University and an LLM (Merit) (International Business Law) from the University of Essex, UK. She is a Thai barrister-at-law and a notarial services attorney.


Jirapat Thammavaranucupt

Senior associate, Weerawong C&P

Bangkok, Thailand

T: +66 2 264 8000



Jirapat Thammavaranucupt is a senior associate in the projects and banking practice group at Weerawong C&P. He advises domestic and international clients on capital markets, mergers, acquisitions and public-private partnerships (PPP). He recently advised the Asian Development Bank on public procurement and the Ministry of Finance on PPP in Thailand. He is a regular speaker at training sessions on PPP, corporate governance and anti-corruption law arranged by the Thai Institute of Directors and national law schools. Jirapat has an LLB (1st Class Honours) from Thammasat University and an LLM from the University of Cambridge (Downing College), UK. He is a member of the Lawyers Council of Thailand and a notarial services attorney.

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