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Business Security Act for Companies in Thailand
The Business Security Act (BSA) in Thailand, enacted in 2015, has revolutionized how businesses can access financial resources. The Business Security Act allows companies to use a wide range of assets as collateral while maintaining control and use of those assets, which opens new avenues for securing funding. This article offers an in-depth look at the Business Security Act and examines its main features, key players, processes, and overall impact on businesses in Thailand.
At Benoit & Partners, we advise businesses on financing structures under Thailand’s Business Security Act. Our team provides legal guidance on using movable assets as collateral, security registration, creditor rights, and enforcement procedures. We assist clients in leveraging the Business Security Act to access funding while maintaining operational control and ensuring compliance with Thai financial and commercial laws.
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Table of Contents
What is the Business Security Act?
The Business Security Act (BSA) in Thailand, also known as the Business Collateral Act, facilitates improved access to financial resources for businesses. The legislature enacted the Act to allow companies to use their assets as collateral while retaining possession and use of those assets. This framework especially benefits Small and Medium-Sized Enterprises (SMEs), which Thailand defines as manufacturers with fewer than 200 employees and revenue below THB 500,000,000, or service providers with fewer than 100 employees and revenue below THB 300,000,000. The BSA establishes a system that allows businesses to use their property or even their entire business as security for loans.
Key Parties Involved in the Business Security in Thailand
In a Business Security Agreement under the Business Security Act, there are three main parties:
First, Security Provider : An individual or a juristic person who owns the assets or business.
Second, Security Receiver : Only a financial institution can receive the business security under the BSA. Examples include Thai banks, foreign banks with a branch in Thailand, insurance companies, security companies, mutual funds, asset management companies, and leasing businesses
Third, Security Enforcer : A licensed person or entity authorized to enforce the security under the BSA if a business is used as security.
Types of Collateral under the Business Security Act
The Business Security Act in Thailand allows businesses to use various assets as collateral to obtain financing. This flexibility especially helps small and medium-sized businesses and enables them to access needed funds without disrupting their operations. The Act permits the following types of collateral:
Business Operations: This category includes assets integral to the business, such as cars, trucks, office equipment, and databases. Businesses may use these assets as security while continuing to use them in daily operations.
Accounts Receivable: This category covers rights to receive payments from customers or clients. It excludes claims arising from financial instruments but includes outstanding invoices and receivables generated through regular business operations.
Movable Property: This category includes physical assets such as machinery, inventory, or raw materials used in the manufacturing process. Businesses may pledge these assets as security while continuing to use them, which offers a significant advantage over traditional pledging methods.
Immovable Property: This category includes real estate assets such as land, buildings, condominium units, and housing projects. Businesses commonly use these assets as collateral because of their high value and stability.
Intellectual Property: This category includes intangible assets such as copyrights, patents, and trademarks. Businesses may use these valuable assets to secure loans and other financial agreements.
Other Properties: The Act currently recognizes perennial plants as another category of eligible collateral. This category can include valuable agricultural assets that play a crucial role in certain businesses.
What are the rights and duties of the key parties?
The Business Security Act clearly defines the rights and duties of the key parties involved in a Business Security Agreement to ensure clarity, fairness, and legal compliance. These defined roles and responsibilities play a crucial role in the effective implementation and enforcement of the agreement.
Security Provider :
Rights:
Possess, use, exchange, and dispose of the secured property and use it in the manufacturing process, provided that the provider does not pledge the assets.
Examine the outstanding debt.
Redeem the secured property at any time.
Duties:
Inform the Security Receiver of any changes to the secured property after registration.
Request revocation of the registration, with the consent of the Security Receiver, once the provider repays the secured debt in full.
Exercise reasonable care over the secured property and accept liability for any decrease in its value.
Allow the Security Receiver to inspect the secured property.
Security Receiver :
Amend the registration when details of the secured property change.
Revoke the registration if the Security Provider disposes of the secured property.
Issue confirmation of the outstanding debt amount.
Issue consent for the revocation of the registration.
Rights:
Receive compensation if the value of the secured property decreases.
Inspect the secured property.
Receive repayment of the debt from the secured property before any ordinary creditor.
Duties:
Security Enforcement
The Business Security Act establishes a structured approach to enforcing security interests and ensures fair treatment for both creditors and debtors while maintaining a transparent and efficient enforcement process. Below is a detailed explanation of how the Act governs enforcement:
- Enforcement of Property : Upon a cause for enforcement, the Security Receiver must notify the debtor and the Security Provider to repay within 15 days. Enforcement can proceed by:
- Foreclosing the secured property and obtaining ownership
- Selling the secured property through public auction, notified to stakeholders at least 7 days in advance.
- Enforcement of Business : The enforcement process involves a Security Enforcer who ensures the business continues to operate. The Security Enforcer conducts a fact-finding inquiry within 15 days, and if enforcement is justified, the business’s management rights transfer to the Security Enforcer immediately.
Conclusion :
The Business Security Act delivers significant benefits to businesses in Thailand, especially SMEs, by offering flexible financing options. Companies can leverage their assets while retaining control over them, which supports business growth and financial stability.
For detailed information and expert advice, contact Benoit & Partners and our team of experienced professionals can help you navigate the complexities of this Act and optimize your financial strategies.
If you need further information, you may schedule an appointment with one of our lawyers.
FAQ
The Business Security Act, enacted in 2015, allows businesses to use a wide range of assets or even their entire business as collateral while retaining possession and use of those assets, improving access to financing.
The Act is particularly beneficial for Small and Medium-Sized Enterprises (SMEs), enabling them to secure loans without disrupting daily operations or transferring asset ownership.
There are three main parties: the Security Provider (asset owner), the Security Receiver (a licensed financial institution), and the Security Enforcer (authorized to manage enforcement if required).
Only licensed financial institutions may act as Security Receivers, including Thai and foreign banks with Thai branches, insurance companies, leasing businesses, mutual funds, and asset management companies.
Eligible collateral includes business operations, accounts receivable, movable property, immovable property, intellectual property, and certain other assets such as perennial plants.
Yes. One of the main advantages of the BSA is that businesses may continue to possess, use, and operate the secured assets during the term of the security agreement.
The Security Provider may use and manage the secured property, inspect outstanding debt, redeem the secured assets at any time, and continue business operations unless enforcement is triggered.