THAILAND Law and Practice Contributed by: Jessada Sawatdipong, Sarunporn Chaianant, Supawich Nimmansomboon and Supawin Pongthananikorn, Chandler Mori Hamada
the assignee will not be considered a secured creditor in bankruptcy proceedings. An assignment of a right is not valid unless it is made in writing, and such assignment can be set up against the debtor or third persons if written notice thereof has been given to the debtor, or if the debtor has con- sented in writing to the assignment. Rights Over Leasehold Assets The Rights Over Leasehold Asset Act B.E. 2562 (2019) introduced a new type of legal interest over land and/ or buildings that is capable of mortgage registra- tion, namely, the right over a leasehold asset (Sap- Ing-Sith). Rights over a leasehold asset are similar to leasehold rights, whereby the owner of an immov- able property registers with the relevant land office a right over a leasehold asset or the right to use the immovable property in favour of another person (the “leasehold right-holder”). The maximum duration of the registered right over a leasehold asset is 30 years. Rights over a leasehold asset can only be registered over land represented by a title deed, land with build- ings constructed on land represented by a title deed and condominium units under the Condominium Act B.E. 2522 (1979). Traditionally, a person who could be a mortgagor in relation to real estate was limited to the owner of the land and/or building. However, pursuant to the Rights over Leasehold Asset Act, a leasehold right-holder is able to mortgage its rights over the immovable prop- erty that has been registered as a right over a lease- hold asset. Note that, in contrast to the limitation of a foreigner to hold ownership of land, a foreigner is allowed to be a leasehold right-holder and can subsequently mort- gage such right in favour of the mortgagee. 5.2 Floating Charges and/or Similar Security Interests There is no concept of a floating charge in Thailand. The closest available security option is business secu- rity, which can cover the present and future assets of the security provider without requiring it to deliver any of its assets to the security receiver.
Business security can be created over a whole busi- ness. However, the key difference between floating charges and security over the whole business under the Busi- ness Security Act is the Thai legal requirement to reg- ister all assets secured under a BSA over the whole business, and the requirement to notify the security receiver of any changes in the details of the secured assets. Contrary to the floating charge concept, where the specification of a class of asset charged to the chargee is required only once, and re-registration for future assets acquired by the chargor – or assets disposed of in the ordinary course of business – is not required, the Business Security Act requires that security pro- viders notify the security receiver when they acquire new assets so that the registration of the security can be amended. Nevertheless, a party may agree to set a threshold of changes that require notification; for example, the duty to notify will apply only if inventory increases or decreases by 20%. As a result of this stringent requirement and the uncertainty of enforcement, to date, a BSA over a whole business has rarely been used in Thailand, especially in relation to large com- mercial loans or project financing transactions. 5.3 Downstream, Upstream and Cross- Stream Guarantees There is no restriction in giving downstream, upstream and cross-stream guarantees under Thai law, and the arrangement can be structured to allow one company to secure another company’s debt. A guarantee pro- vided by publicly listed companies or their subsidiar- ies to secure the debt of another company that shares the same controlling shareholder(s) or person(s) with management power is considered an RPT that may require approval from the board of directors or share- holders, and may be subject to reporting requirements (depending on the size of the transaction). 5.4 Restrictions on the Target There are no specific restrictions on the target to grant guarantees, security or financial assistance for the acquisition of its own shares. However, if the provi-
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