New Business Collateral

New Business Collateral

            In the past, the types of assets that could be used as collaterals in favor of financial institutes without having to transfer the possession were limited to immovable property and certain movable property with registration. Business operator could not use any asset which is not related to its business as collateral without transferring the possession to the collateral acceptor. Movable property include inventory, raw material used for production, or intellectual property are not accepted as collaterals in the past, even if these assets are considered to be valuable as well. Not to mention how slow the mortgage enforcement process is, which proves to be a major obstacle to the business sector as a whole. The Business Collateral Act B.E. 2558 was therefore introduced to support the use of such valuable assets as collateral without having to transfer the possession to the collateral acceptor, as well as establishing fast, effective and justified system towards collateral enforcement which, as a whole, will be beneficial to the business sector.

            The Business Collateral Act B.E. 2558 was firstly announced in the Royal Thai Gazette on the 5^th November 2015 and will become effective on 4^th July 2016. This will mark a major change in the business collaterals in applying for credits from financial institutes in Thailand. The financial institutes must also prepare themselves to be ready for such change and there might be possibility that they will register those original collaterals in hand to be under the new Act as well.

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Credits: The Business Collateral Act B.E. 2558

Rearranged  and translated by: Interlex Law Office

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