No. 

Security given by way of a mortgage or a business security under the Business Security Act B.E. 2558 (2015), which came into force in early July 2016 ("Business Security Act") may be ranked in a specified order on a "first in time" basis. In other words, where multiple security interests are registered over the same property as security for different underlying debts, the claim of a secured party (or a group of secured parties) that registers its security over that property will be, based on prior registration, senior to or will have priority over the claims of subsequent secured parties.

A mortgage can be created over land, buildings, machinery, ships or vessels weighing not less than five tons, floating houses or rafts, and certain animals that can be used as vehicles (such as buffaloes and oxen).

A business security under the Business Security Act can be created over specific assets or an entire business enterprise (which is likely to include contractual rights and movable property used in the business of the security provider such as machinery, inventory, raw materials and intellectual property).

A simple contractual arrangement cannot be used to vary such order, but it may be moderated and varied by managing the deregistration and reregistration of the mortgage or the business security.

Thai law has recently recognized the concept of floating security following the introduction of the Business Security Act. It is now possible to create security over a "business" or "enterprise" as a going concern, which is broadly defined as all assets (including inventory and related rights) used in the operation of the security provider's business on a non-possessory basis. This most recently available security interest under the Business Security Act has attributes similar to those of a "floating charge."

The creation of security over a changing pool of assets does not align with the fundamental concept in civil law systems that security must only be taken over an identifiable asset and that the asset must be specifically identified when taken as security. Many issues under the Business Security Act remain debatable, and further guidance and regulations from the authorities will be necessary for its successful implementation as intended. As it will take some time for the act to function smoothly, a considerable transition period is expected. As the act is implemented and tested over time, any difficulties in relation to the taking, maintenance and enforcement of floating security should become clearer.

Additionally, under the Business Security Act, individuals and juristic persons can become security providers under the act, but only "financial institutions" and those specifically designated under a ministerial regulation can accept business security as secured creditors. In this context, "financial institutions" refers to insurance companies under Thai insurance laws and financial institutions under the FIBA only. Note that foreign banks without a branch in Thailand participating in loan syndication with Thai financial institutions are also entitled to accept business security as secured creditors. 

Therefore, foreign banks without a license to carry on commercial banking activities in Thailand that are not a party to a syndicate with Thai financial institutions are effectively excluded from taking business security as secured creditors under the current Business Security Act.

The Civil and Commercial Code of Thailand prohibits the establishment of a trust by any will or by any juristic act, unless the trust is established in accordance with a specific law for the establishment of a trust, i.e., under the Trust for Capital Market Transactions Act B.E. 2550 (2007), which specifically empowers parties in capital market transactions to establish a trust for specific purposes. There are currently no laws in Thailand that provide for the establishment of  a trust in relation to non-capital market transactions. As the borrowing and lending of monies by financial institutions are not regarded as capital market transactions, the obligation of any designated agent to hold any property or rights "in trust" for the secured parties may not be recognized or enforceable as a trust under Thai law.

Therefore, the use of a security trustee is not common in relation to loans that are governed by Thai law. In a transaction where there is more than one lender and a security agent is appointed, the security agent itself usually executes security documents in two capacities, namely as follows:

• For and on behalf of the lenders and other secured parties (if any)
• For and on its own account as the security agent

In this way, a principal and agent relationship is created between the lenders and the security agent. The security agent is duly singly empowered to act for and on behalf of the lenders in relation to a number of aspects of a transaction, such as the execution of security agreements and the holding of certain secured assets, such as pledged share certificates, for the benefit of the secured parties.

Notwithstanding this, a security agent may not be registered as the sole mortgagee on behalf of all secured parties in relation to a mortgage or as the sole secured party on behalf of all parties in relation to a business security. Instead, Thai mortgage law and the Business Security Act require every lender and secured party taking security over mortgageable property or assets of the business (as the case may be) in relation to the same underlying debt to be individually registered as a mortgagee or security holder.

No. Please note that parallel debt structures are not recognized by Thai courts.

As mentioned in the answer to question 5 of this section, the security agent itself usually executes security documents in two capacities, namely:

• For and on behalf of the lenders (under the doctrine of agency rather than as a trustee)
• For and on its own account as the security agent

Therefore, on a change of lenders, there is no need to re-execute the security documents because the security agent can act on behalf of the new lender, provided that the new lender duly and legally accedes to the finance documents (in which the provisions authorizing and appointing the security agent to act for and on behalf of the secured parties are also set out).

However, specific legal requirements governing the formalities for perfecting certain security interests (such as share pledges and mortgages) may require certain amendments to be made to existing security documents or additional actions to be taken to ensure that the new lender is granted effective and enforceable security. For example, notwithstanding the fact that share certificates are only required to be physically pledged with the security agent, the name and address of each individual lender taking security over the pledged shares as pledgee must be duly recorded in the share register book of the company that issued the pledged shares. In these circumstances, the new lender must also be recorded as a pledgee in that company's share register book.

Additionally, as stated in the answer to question 5 of this section, in relation to a mortgage and a business security created under the Business Security Act, each individual lender and secured party must be registered as a secured party. Therefore, an additional filing must also be made to register a new lender as a secured party.

Although a pledge over bank accounts is typically required as part of the security package in lending transactions as a matter of market practice in Thailand, a pledge over bank accounts (or more accurately, the pledge of the rights to the cash deposits in those bank accounts) is not clearly recognized as a valid security interest under Thai law. In fact, a number of Supreme Court judgments consistently follow the interpretation that a pledge cannot be created over a changing pool of cash deposited in a bank account.

Further, as mentioned in the answer to question 4 of this section, eligible persons that can become security holders under the Business Security Act are insurance companies under Thai insurance laws, financial institutions under the FIBA, and those specifically designated under a ministerial regulation to accept business security as secured creditors, which includes foreign banks that participate in a loan syndication with Thai financial institutions. Foreign banks without a license to carry on commercial banking activities in Thailand that are not party to a syndicate with Thai financial institutions are excluded from taking business security as secured creditors under the current Business Security Act.

No statutory requirement stipulates that a guarantee or security must be given in return for a corporate benefit. If the act of giving a guarantee or any other form of collateral to secure the debts of a third party is within the scope of the company's objectives, as registered with the Ministry of Commerce, a company may give a guarantee or security for no consideration.

Valid security interests under Thai law

At present, a pledge, a mortgage and business security under the Business Security Act are the only forms of valid security interests that can be created over assets recognized by Thai law.

Pledge

A pledge can be created over movable property through the physical delivery of the pledged property to the pledgee's custody. Negotiable instruments such as bills of exchange, promissory notes, checks and negotiable certificates of deposit can also be pledged by endorsement and delivery of the instrument to the custody of the pledgee.

For a pledge of shares, the pledgor is required to physically deliver the share certificates representing the pledged shares to the pledgee and record that pledge in the share register book of the company that issued the pledged shares.

A pledge becomes automatically discharged if and once the pledged property has returned to the physical possession of the pledgor.

Mortgage

A mortgage can be created over land, buildings, machinery, ships or vessels weighing not less than five tons, floating houses or rafts, and certain animals that can be used as vehicles (such as buffaloes and oxen).

A mortgage will be created on the execution of a mortgage agreement made in the relevant official form by the mortgagor and the mortgagee and its registration with the relevant authority. A mortgage agreement must be only made in Thai language, but the parties can attach a supplement to the official mortgage agreement that contains additional specific terms agreed between the mortgagor and mortgagee. The mortgage agreement and its supplemental agreement must be executed in the presence of a competent officer at the time of filing an application for registration with the relevant authority. The secured amount of the mortgage must be stated in Thai baht in the mortgage agreement. Each individual lender must also be named as a mortgagee in the mortgage agreement and be registered as a mortgagee to be recognized as a secured creditor under Thai bankruptcy law.

Business security

Business security under the Business Security Act is created when the parties enter into a business security agreement (which must contain prescribed contents) in writing, and it is registered with the Ministry of Commerce via an electronic registration system. The business security agreements may be made in Thai or English, but the registration particulars required for registration must be in Thai.

Other rights

In practice, the parties may enter into any other form of contract (e.g., a guarantee, conditional assignment, subordination or option agreement) as part of the security package. However, these agreements will be enforceable between the parties but will not be recognized as having priority over other creditors under Thai law (in particular, under Thai bankruptcy law). In other words, they will be treated as unsecured debts, and a beneficiary under a guarantee and an assignee will be paid as unsecured creditors.

These arrangements can be effected as set out below.

Guarantee

A guarantee (suretyship) is a contractual right given by a third party to secure the performance of an obligation by a debtor. If the debtor defaults in the performance of its obligations under a separate underlying agreement, the guarantor must assume the payment obligations of the debtor. In order to be enforceable in court between the parties, the guarantee agreement must be made in writing and must be signed by the guarantor. It is not necessary for the creditor to sign a guarantee agreement.

A guarantor has rights of subrogation. After a guarantor has made a payment under the guarantee, the guarantor will have rights of recourse against the debtor for the amount paid.

Assignment

In project financing transactions, it is common for a debtor to be required to assign its rights (and/or obligations) under the major project agreements to secure the performance of its obligations under the financing agreements and/or to facilitate the enforcement of secured assets in relation to the project. However, it should be noted that there is uncertainty in relation to the legal operation of an assignment as a form of security in practice, due to the lack of legislation governing the matter.

Assignments of property lease rights and accounts receivable are the most common in business transactions.

The creation of an assignment of rights and/or obligations under a contract is made by way of a written agreement between the assignor and the assignee with notification to and/or consent from the counterparty of the contract under which the assignor's rights and/or obligations have been assigned. It is important to note that in the case of an assignment or transfer of an obligation by way of "novation," the written consent of the assignor's counterparty must also be obtained.

There is a registration and translation requirement for mortgages and business security as previously explained in the answer to question 11 of this section.

There is no notarization requirement for other security interests or other contractual security arrangements. However, in effecting the registration of mortgages, the competent officer may request that the supporting documents executed or sent from outside Thailand be notarized (and, if applicable, legalized) prior to its submission to the officer.

To be admissible as evidence in the courts of Thailand, documents in foreign languages are required to be translated into the Thai language. However, if the case is brought to the Central Bankruptcy Court or the Central Intellectual Property and International Trade, a document in English may be admitted by such court, should the parties agree not to translate it and if the court is of the opinion that the document is not evidence in a major issue of the case.

Stamp duty

The original of any guarantee is subject to stamp duty of THB 10 and each duplicate copy of the guarantee is subject to nominal stamp duty of THB 5.

A pledge agreement is subject to stamp duty of THB 1 for every THB 2,000 of underlying obligations that that pledge secures (or only THB 1 for underlying obligations that the pledge secures that does not have a specified monetary value or pledge amount) and each duplicate copy of the pledge agreement is subject to nominal stamp duty of THB 5. A pledge is exempted from stamp duty when the pledge secures obligations under a loan agreement in respect of which the applicable stamp duty has already been paid.

The stamp duty for guarantees and pledge agreements is due and payable within 15 days after the date of execution of the relevant agreement. If the agreement is executed abroad, the stamp duty is payable within 30 days of the original being physically brought into Thailand.

Each appointment of an agent (i.e., facility agent or security agent) under an intercreditor agreement is subject to a maximum stamp duty of THB 30 per appointment of an agent per each principal.

Registration

The registration of a mortgage is subject to registration fees, payable to the relevant authority at the time of registration. The fees below relate to assets that are usually the subject of a mortgage:

• For a mortgage of land and buildings, 1% of the mortgage value, but not exceeding THB 200,000 for each mortgage
• For a mortgage of machinery, 0.1% of the mortgage value, but not exceeding THB 120,000 for each mortgage
• For a mortgage of a condominium, 1% of the mortgage value for each mortgage

The registration of business security is subject to the following registration fees, payable to the relevant authority at the time of registration:

• For business security over land, 1% of the maximum secured value, but not exceeding THB 200,000 for each business security
• For business security over assets other than land, 0.1% of the maximum secured value, but not exceeding THB 1,000 for each business security