Securitisation 2026 Comparisons

Generally, more than 50% of securitised assets in Thailand are in the form of ABS, backed by retail mortgage loans, auto loans and hire-purchase receivables relating to vehicles. These asset classes are commonly used due to their predictable cash flows, established underwriting standards and relative familiarity among originators and investors.

In addition to the above, other types of financial assets have also been securitised, albeit to a lesser extent. These include (i) unsecured consumer receivables, such as credit card and personal loan portfolios, (ii) convertible debentures in certain structured transactions, and (iii) rights to receive future cash flows, particularly from rental income and service fees derived from commercial properties or infrastructure-related assets.

The securitisation transactions of the financial assets described in 1.1 Common Financial Assets is typically structured using a two-tier framework.

Firstly, an originator transfers the underlying financial assets to a special-purpose entity (SPE). Following the transfer, the SPE then issues debt securities, typically in the form of debentures to investors. These debt securities are backed by the cash flow generated by those underlying financial assets. Repayments to investors (including principal and interest) are therefore dependent on the performance of the securitised asset pool, with credit enhancement mechanisms commonly incorporated to mitigate risk and improve the credit profile of the debentures.

Securitisation structures as referred to in 1.2 Structures Relating to Financial Assets are governed by the following principal laws and regulations:

Securitisation Framework:

• Emergency Decree on Special Purpose Juristic Persons for Securitisation BE 2540 (1997) (as amended) (the Securitisation Decree);
• Securities and Exchange Commission Notification No KorJor 7/2552 Re: Rules for Securitisation (as amended); and
• Securities and Exchange Commission Notification No KorJor 10/2566 Re: Assignment of Receivables and the Change of Servicer.

Securities Issuance:

• Securities and Exchange Act BE 2535 (1992) (as amended);
• Capital Market Supervisory Board Notification No TorJor 15/2565 Re: Public Offerings of Debt Securities;
• Capital Market Supervisory Board Notification No TorJor 16/2565 Re: Application for and Approval of Private Placements of Newly Issued Debt Securities; and
• Capital Market Supervisory Board Notification No TorJor 19/2565 Re: Form of Filing for Debt Securities (as amended).

The SPE is required to be incorporated in Thailand to qualify or to enjoy privileges granted pursuant to the principal laws and regulations as referred to in 1.3 Applicable Laws and Regulations, and the SPE could either be in the form of a private limited company, a public limited company or any other type of entity to be prescribed by the Securities and Exchange Commission of Thailand (the SEC).

The principal forms of credit enhancement used in Thai securitisation transactions to improve the credit quality of the debentures and protect investors from potential losses on the underlying asset pool are:

• Subordination, whereby the debentures are structured into different tranches with levels of seniority. The senior tranche receives priority in repayment and is protected by the junior tranche which absorbs losses ahead of the senior tranche and assumes increased risk exposures.
• Over-collateralisation, either revolving or non-revolving, where the value of the underlying asset pool exceeds the value of debt securities, providing a cushion against potential losses due to devaluing of the underlying financial assets.
• Cash reserve account, where a portion of proceeds from the debentures or ongoing cash flows is set aside in a cash reserve account. This reserve can be used to cover shortfalls in collections or to meet repayment obligations to investors during periods of stress.

The issuer in a Thai securitisation transaction is required by the law to be SPE established specifically for the transaction.

The issuer’s primary role is to acquire the underlying financial assets from the originator and pool them into a defined asset pool. The SPE then issues debt securities, typically in the form of debentures, to investors, with the asset pool serving as the underlying source of repayment. The proceeds from the issuance of debt securities are used by the SPE to pay the purchase price for the underlying financial assets to the originator.

In terms of responsibilities, the issuer is responsible for ensuring that cash flows generated from the asset pool are properly applied to meet its obligations to investors, including the repayment of principal and interest under the debentures. The issuer is to facilitate the overall transaction mechanics, including maintaining the integrity of the asset pool and coordinating with relevant parties (such as originator, servicers, security holder representatives and account banks).

As the SPE is a legal entity established solely to carry out securitisation transactions and is bankruptcy-remote, it is therefore restricted from engaging in any business other than activities incidental to the securitisation. Upon full repayment of the debentures, the SPE is required to be wound up. Any residual assets remaining after all obligations have been satisfied are generally transferred back to the originator in accordance with the transaction documents.

The role of a sponsor is not separately defined or commonly recognised in Thai securitisation transactions.

In practice, the originator typically performs the functions that would otherwise be attributed to a sponsor, including structuring the transaction, selecting the asset pool and coordinating with transaction parties. Where the term “sponsor” is used, it generally refers to the originator or an affiliated entity.

Accordingly, sponsors – where relevant – are usually financial institutions or large corporates with significant receivables portfolios, although their role is not distinctly regulated under Thai securitisation law.

The originator is the entity that owns or holds and transfers the underlying financial assets to the SPE as part of the securitisation.

Its key responsibilities include selecting and selling eligible assets (typically by way of a true sale), and in many cases acting as servicer by collecting payments from obligors on behalf of the SPE for a fee. The originator also typically provides representations and warranties in respect of the assets and may retain a subordinated interest. Any residual cash flows remaining after full repayment to investors are generally returned to the originator.

Originators are usually financial institutions or large corporates with substantial receivables portfolios, such as banks, finance companies, leasing and hire-purchase operators, and providers of personal loans or credit card facilities.

In Thailand, the role formally recognised under applicable Thai securities laws is that of the underwriter, and Thai securities law does not separately distinguish a placement agent role in securitisation transactions.

An underwriter is typically a securities company or a financial institutional licensed by the SEC, responsible for arranging, underwriting and distributing the debentures issued by the SPE to investors. While acting on a firm underwriting basis, it may also assume the risk of subscribing for any unsold portion of the issuance.

Its responsibilities generally include advising on the structure and pricing of the securities, coordinating the offering process, preparing or reviewing offering documentation, conducting investor marketing and book building, and ensuring compliance with regulations of the SEC. It is worth noting that under Thai law, there is a requirement to engage a financial adviser responsible for the filing and offering document to be submitted to SEC together with the SPE and the originator.

The appointment of an underwriter is mandatory for public offerings of securitised debentures to the general investing public and private placements to ultra-high net worth investors (UHNW), or high net worth investors (HNW). By contrast, it is not required for private placements made solely to institutional investors.

The servicer is responsible for administering the underlying financial assets and collecting payments from the obligors on behalf of the SPE.

Its primary role is to collect receivables and remit such collections to the SPE (after deducting agreed servicing fees). In practice, the originator typically acts as the servicer, given its existing relationship with the obligors and familiarity with the assets. In addition to collections, the servicer is responsible for the day-to-day administration of the asset pool, including maintaining records, managing payment flows between the SPE and obligors, handling documentation and customer communications, and enforcing rights in respect of the assets. This includes managing delinquencies, defaults and recovery processes, as well as monitoring the overall performance and liquidity of the asset pool.

Servicers are also subject to operational safeguards, including the obligation to segregate collected funds from their own assets and to remit such funds to the SPE within the prescribed timeframe, together with periodic reporting.

The servicer must be appointed by the SPE and meet qualifications under the approved securitisation scheme, including having adequate systems and complying with servicing standards. No separate servicer licence is required, and regulated financial institutions generally satisfy these requirements. Where the servicer is not the originator, it is generally required to be a qualified entity, such as a financial institution, an entity approved by the SEC, or an entity with an appropriate level of creditworthiness.

Investors provide funding for the securitisation by subscribing for debt securities, such as debentures issued by the SPE and bear the risk of the underlying assets, subject to any credit enhancement. Investors do not have an active role in the day-to-day management of the underlying financial assets, which is delegated to the servicer and other transaction parties.

In terms of responsibilities, investors generally have no active obligations other than paying the subscription price for the debentures and complying with applicable offering restrictions. They typically rely on contractual protections and disclosure in the offering documents to safeguard their interests.

Investors in Thai securitisation transactions are institutional or sophisticated investors, such as commercial banks, insurance companies, asset management companies, UHNW, HNW and retail investors. Whether the securitisation bonds are offered to retail investors or not depends on the structure of the transaction.

Although the Securitisation Decree contemplates two possible structures for securitisation transactions, the SPE and a trust (constituted under the Trust for Transactions in Capital Markets Act BE 2550 (2007) (as amended)), the SEC notifications and related subordinate regulations do not set out an operative framework to support the implementation of a trust structure. As a result, securitisation through a trust structure is generally not feasible in Thailand, and securitisation in Thailand is typically implemented through a bondholders’ representative structure instead.

For any issuance of debentures, whether by way of public offering or private placement, the issuer (the SPE) must appoint a bondholders’ representative. Such representative must be a qualified financial institution with sufficient credibility and must not have any conflict of interest in performing its duties.

The bondholders’ representative’s primary role is to safeguard the interests of the investors. Its responsibilities include monitoring the issuer to ensure compliance with the terms and conditions of the debentures, overseeing that no actions are taken in respect of the secured assets that may prejudice investors, and enforce rights or claims on behalf of the bondholders where necessary. It also oversees the performance of key transaction parties (including the originator, SPE, servicer and transaction administrator) and, where applicable, provides consent to certain key actions, such as the replacement of the servicer.

A security agent may be appointed where additional security is granted beyond the underlying financial assets, and its role would be to hold and administer the security on behalf of the investors, including enforcing the security and applying proceeds in accordance with the transaction documents.

However, in general, Thai securitisation transactions are typically structured without additional security, as the debentures are primarily backed by the underlying financial assets. As a result, the appointment of a security trustee or security agent is not common; however, there is nothing to prevent having a trustee/security agent for securitisation structures in Thailand.

In Thailand, securitisation transactions are predominantly structured through the transfer of receivables from the originator to the SPE, typically by way of an assignment of receivables and documented in a receivable assignment agreement. Accordingly, the transfer is affected by way of an assignment of rights under the Civil and Commercial Code of Thailand (CCC).

The principal provisions covered in the assignment agreement include:

• the scope and mechanics of the assignment;
• representations and warranties from the originator regarding the validity, enforceability and quality of the receivables;
• covenants relating to the servicing and maintenance of the receivables;
• servicing arrangements (often with the originator acting as servicer);
• events of default and termination provisions; and
• indemnities for losses arising from breaches or defects in the receivables.

The warranties commonly used generally comprise of:

• the underlying financial assets are valid, legally binding and enforceable obligations of the relevant obligors;
• the originator has good title to, and the right to assign, the underlying financial assets free from encumbrances (unless otherwise disclosed); and
• there is no existing default, claim or litigation disputes in respect of the underlying financial assets.

Enforcement of warranties is primarily contractual. Where a breach occurs, the transaction documents typically provide for remedies such as indemnification for losses suffered by the SPE or investors, and, in certain cases, the triggering of early amortisation or enforcement actions.

As mentioned in 3.1 Bankruptcy-Remote Transfer of Financial Assets,the transfer of the underlying financial assets from the originator to the SPE can be made by way of the assignment of right under the CCC. Such assignment of right will be valid if it is made in writing (through the entering into the assignment agreement between the originator and the SPE). In addition, such assignment will be effective against the debtor or other third parties only where either (i) a written notice of the assignment has been given to the debtor or (ii) the debtor has provided its consent.

Where the debtor consents to the assignment without reservation, it is precluded from asserting against the assignee any defences it may have had against the assignor. In contrast, where the debtor is only notified regarding the assignment without giving any consent to such assignment, the debtor remains entitled to raise against the assignee any defences that existed prior to receipt of such notice.

However, the Securitisation Decree permits an assignment of rights to be effective without giving notice to the debtor if the following conditions are met, which are (i) where the original payee of the receivables (the originator) continues to act as servicer or (ii) where the assignment arises by operation of law, such as in the case of a merger. Notwithstanding the above, in such circumstances the debtor retains the right to assert against the assignee any defences that it could have raised against the assignor prior to the assignment.

Key covenants typically include obligations on the originator (often acting as servicer) to maintain proper servicing standards, keep accurate records, comply with applicable laws, refrain from amending underlying financial assets in a manner that adversely affects investors, and notify relevant parties of material events. The SPE is generally subject to restrictions on its activities which must be limited to only the securitisation matter, reporting obligations, and requirements relating to the appointment and oversight of the servicer. Financial covenants may also apply, such as maintaining agreed levels of credit enhancement and complying with portfolio performance tests.

These covenants are primarily enforced contractually. Breaches may trigger events of default under the terms and conditions of the debentures, require disclosure to regulators and investors, and be monitored and enforced by the bondholders’ representative acting on behalf of investors.

The scope and terms of the servicer’s duties are set out in the service agreement and may vary depending on the type of underlying financial asset. Key provisions typically cover the appointment of a qualified servicer, as required under SEC regulations, and its core duties, including collection of receivables, record-keeping, enforcement against defaulting obligors, remittance of funds in accordance with the transaction waterfall, and periodic reporting to relevant parties.

The service agreement also addresses servicer replacement, including triggers such as default or insolvency, procedures for appointing a successor (often subject to bondholders’ representative approval), and, in some cases, the use of a back-up servicer.

These provisions are enforced through contractual remedies under the servicing agreement (including termination and indemnities), oversight by the bondholders’ representative, and regulatory reporting obligations to the SEC in the event of material issues.

Key defaults typically include payment defaults by the SPE (eg, failure to repay principal or interest to investors), breaches of covenants, misrepresentations, and insolvency or cessation of business of the SPE. Defaults may also arise at the servicer level, such as failure to collect or remit funds, breach of servicing standards, or insolvency, as well as at the originator level, including breaches of representations and warranties or insolvency. In addition, performance-based triggers, such as deterioration in portfolio performance or shortfalls in credit enhancement, may also activate default or early intervention mechanisms.

Enforcement is primarily contractual. Remedies may include acceleration of the debentures triggering immediate repayment of debentures, replacement of the servicer, and the exercise of indemnity rights against the originator. The bondholders’ representative typically monitors such events and may take enforcement action on behalf of investors. Material defaults are also required to be reported to the SEC and disclosed to investors.

The originator typically provides the indemnities, covering breaches of representations and warranties, defects in title or undisclosed encumbrances, pre-transfer issues in relation to the underlying financial asset, tax exposures, and non-compliance with applicable laws. The servicer generally indemnifies losses arising from servicing failures, negligence or misconduct, and regulatory non-compliance. The SPE’s indemnities are usually limited to gross negligence or willful misconduct.

Indemnities are primarily enforced contractually through direct claims by the relevant party, and may also be supported by set-off rights or recovery from reserved or subordinated amounts. Claims may ultimately be pursued through court proceedings if necessary. Such indemnities are typically subject to customary limitations, including materiality thresholds, liability caps, knowledge qualifiers and specified claim periods.

The terms and conditions of securitised debentures can be set out in a written “Terms and Conditions” document, which together with the registration statement and prospectus govern the rights and obligations of the SPE and the investors. Such documents need to comply with applicable SEC requirements and are filed with the SEC for public offerings.

The principal subject matters covered generally include:

• key definitions and a description of the securities (eg, amount, form and governing law);
• repayment terms, including interest, maturity, and redemption mechanics;
• details of the underlying asset pool and any credit enhancement;
• covenants of the issuer;
• events of default and related remedies;
• provisions relating to the appointment and powers of the bondholders’ representative; and
• other administrative matters, such as amendments, notices, tax provisions and transfer restrictions.

Thai securitisation transactions are typically structured to avoid interest rate or currency mismatches at the outset, by aligning the characteristics of the underlying assets with those of the issued debentures. As a result, the use of derivatives for hedging purposes has not been a normal feature of the current Thai securitisation market, reflecting its relatively straightforward and conservative structure.

The requirement for an offering memorandum or prospectus in Thai securitisation transactions depends on the type of offering and the category of target investors.

For public offerings of securitised debentures, a registration statement and prospectus must be prepared and filed with the SEC, containing detailed disclosure on the issuer, asset pool, transaction structure and risk factors, in accordance with prescribed SEC forms and requirements.

For private placements to institutional investors, UHNW, or HNW, disclosure requirements are reduced. A simplified filing is typically made with the SEC, and an information memorandum or offering circular may be used, with more flexibility in form and content.

Certain offerings, such as those limited to institutional investors or a restricted number of investors, may be exempt from full registration and prospectus requirements.

These requirements are primarily governed by the Securities and Exchange Act BE 2535 (as amended) (the SEC Act) and relevant SEC notifications, including:

• SEC Notification No TorJor 15/2565 (public offerings) and TorJor 16/2565 (private placements): Approval requirements and conditions;
• SEC Notification No TorJor 19/2565: Filing forms and disclosure requirements; and
• SEC Notification No KorJor 7/2552: Rules for securitisation including disclosure requirements for securitisation schemes.

Thailand has a comprehensive disclosure framework specifically applicable to securitisation transactions.

The key laws include the Securitisation Decree, which requires securitisation schemes to contain prescribed information on the structure, assets and transaction parties, and the SEC Act, which provides the overarching disclosure regime.

In addition, specific SEC notifications as mentioned in 3.10 Offering Memoranda – particularly those governing securitisation schemes, assignment of receivables and debt securities offerings – set out detailed disclosure requirements. These include prescribed filing forms for securitised debentures and requirements tailored to securitisation structures.

The specific disclosure laws or regulations for securitisation in Thailand are as addressed in 4.1 Specific Disclosure Laws or Regulations.

There are no specific statutory or regulatory requirements mandating credit risk retention in Thailand.

In practice, credit risk retention is achieved through transaction structuring, including subordinated tranches, over-collateralisation, reserve accounts and originator support (eg, representations and repurchase obligations). The SEC reviews the adequacy of these measures as part of its approval of the securitisation scheme, and credit rating agencies also assess them in assigning ratings.

Securitisation transactions are subject to ongoing reporting requirements, including:

• quarterly servicer reports to the SPE and the bondholders' representative on collections and outstanding asset balances;
• annual reporting for certain labelled bonds (eg, green, social or sustainability bonds); and
• event-driven reporting of material developments, including changes to the asset pool, servicer or transaction structure.

These obligations are regulated and enforced by the SEC. Non-compliance may result in regulatory sanctions, criminal liabilities and adverse consequences for future approvals.

Credit rating agencies are regulated and supervised by the SEC and must be approved to provide credit ratings for securities offerings in Thailand.

For public offerings to retail investors, securitised debt securities generally require a credit rating. The rating process considers, among other things, the quality of the underlying assets, the adequacy of credit enhancement, the transaction structure and the capabilities of the servicer.

The SEC may impose administrative sanctions, including suspension or revocation of approval, for non-compliance by rating agencies.

The capital and liquidity treatment of securitisation exposures is governed primarily by Bank of Thailand (the BOT) prudential regulations (Basel-aligned), rather than SEC rules.

For banks and regulated financial institutions, securitisation exposures are risk-weighted based on factors such as credit quality and tranche seniority, with senior tranches generally attracting lower capital charges and subordinated tranches higher ones. Distinctions are also made between originators and investors, and structural features (eg, credit enhancement) are considered in determining the applicable treatment.

Insurance companies are subject to separate rules issued by the Office of Insurance Commission (OIC), including investment limits and capital requirements, while securities companies are governed by SEC regulations on net capital rules.

There are no securitisation-specific laws or regulations governing the use of derivatives in Thai securitisation transactions. Although the use of derivatives for hedging purposes has not been a feature of the current Thai Securitisation market as mentioned in 3.9 Derivatives, the applicable regulatory framework for derivatives under the SEC regulations and the BOT regulations applies if there is any use of derivatives in the future securitisation transaction.

Thailand has a comprehensive investor protection regime for securitisation transactions, primarily under the Securitisation Decree and related SEC regulations.

Key protections include statutory safeguards such as bankruptcy remoteness of transferred underlying financial assets, restrictions on the activities of the SPE, and mandatory SEC approval of securitisation schemes. Investors are further protected through disclosure requirements (eg, registration statements, prospectuses and ongoing reporting), as well as structural features such as credit enhancement, qualified servicers, bondholders’ representative arrangements and defined events of default.

The framework also differentiates between investor types, with retail investors subject to stricter protections (including disclosure requirements and credit rating requirements), while institutional investors and high net worth investors are considered as a big boy and are regulated under flexible regimes.

The SEC is the primary regulator responsible for oversight and enforcement, including approval of transactions, ongoing supervision and investigation of violations. Non-compliance may result in administrative sanctions, fines, revocation of approvals, civil liability to investors and, in serious cases, criminal penalties.

In addition to the SEC securitisation regime, Thai commercial banks are also subject to the BOT prudential rules when they securitise assets or invest in securitisation positions. In particular, BOT Notification No FPG 08/2551 governs permission for financial institutions to conduct securitisation business, while BOT capital supervision rules apply Basel III-style prudential treatment to relevant exposures.

Where a bank acts as the originator, the BOT framework addresses matters such as permission to undertake securitisation business, internal risk management and control requirements, notifications to the BOT, limits on shareholding in the SPE, and conditions relevant to asset transfer and continued involvement. Commercial banks benefit from general permission, but certain institutions with a narrower business scope, such as finance companies, must obtain prior BOT approval.

Where the bank invests in securitisation positions, the main impact is prudential rather than transactional. BOT rules require the bank to treat such positions for capital purposes by reference to the nature of the exposure and to maintain appropriate capital, with additional considerations applying to retained exposures, underwriting positions and concentration or large exposure limits.

Accordingly, the material effect of these rules is that the bank participating in securitisations – whether as originators, servicers, underwriters or investors – must comply not only with SEC transaction rules, but also with BOT supervision on approval, risk management, reporting and capital treatment.

Securitisation transactions are typically conducted through the SPE established under the Securitisation Decree which may take a form of a private limited company, a public limited company, or another juristic person approved by the SEC (as mentioned in 1.4 Special Purpose Entity (SPE) Jurisdiction) or a trust (as mentioned in 2.7 Bond/Note Trustees), and must operate strictly in accordance with an approved securitisation scheme.

In practice, the choice of entity is driven by several factors. Bankruptcy remoteness is a primary consideration, ensuring that the securitised assets are insulated from the originator’s insolvency. Regulatory compliance and familiarity with the SEC framework also influence the selection, with corporate SPEs being the most used structure. Tax considerations may also be relevant, particularly in ensuring neutrality or efficiency of the transfer and cash flow structure.

In Thailand, there is no equivalent to regimes such as the Volcker Rule that impose activity-based restrictions specifically targeting securitisation vehicles. Instead, the regulatory approach focuses on ensuring that the SPE operates strictly within the scope of an approved securitisation scheme.

Accordingly, the SPE is typically structured as limited-purpose entities and avoids engaging in any activities outside the securitisation, such as conducting unrelated business, taking on additional liabilities, or altering the asset pool in a manner inconsistent with the approved structure. This is primarily to preserve bankruptcy remoteness and to remain within the regulatory perimeter prescribed by the SEC.

Responsibility for ensuring compliance rests with the SPE itself (through its directors), as well as the bondholders’ representative and other transaction parties who monitor adherence to the transaction documents and regulatory requirements. The SEC also exercises oversight through its approval and supervisory functions.

If the SPE is found to have engaged in unauthorised activities, consequences may include regulatory action by the SEC (such as sanctions or revocation of approval), potential breaches of transaction documents triggering events of default, and exposure to liability for losses suffered by investors.

In practice, such entities would generally be subject to the same framework as private originators under the Securitisation Decree and SEC regulations, although they may also be subject to additional requirements under their constituent laws, supervisory ministries or Ministry of Finance policies.

Investing entities are typically institutional investors, UHNW, HNW and retail investors.

Regulatory treatment varies by category of investing entities:

• Institutional investors benefit from simplified disclosure and fewer restrictions.
• UHNW and HNW investors may participate in private placements subject to qualification requirements.
• Retail investors are subject to full disclosure and credit rating requirements.

Certain regulated investors (eg, banks, insurers and funds) are also subject to investment limits and internal due diligence expectations.

The principal laws and regulations relevant to securitisation in Thailand have already been outlined in 1.3 Applicable Laws and Regulations, 3.10 Offering Memoranda and 4.1 Specific Disclosure Laws or Regulations.

Synthetic securitisations are not expressly provided for under the existing Thai securitisation framework and are not commonly used in practice in Thailand.

The current legal regime, particularly the Securitisation Decree and relevant SEC regulations, contemplates “true sale” structures involving the transfer of underlying assets to the SPE. As such, the framework does not readily accommodate synthetic structures, where credit risk is transferred without an actual assignment of assets. Therefore, there are no established or commonly used synthetic securitisation structures in Thailand.

Thai insolvency principles under the Bankruptcy Act BE 2483 (1940) (as amended) (the Bankruptcy Act) could affect securitisation transactions, including rules on fraudulent conveyance, preferential transfers and the imposition of an automatic stay upon receivership, which may otherwise expose asset transfers to claw back risk.

However, such risk is mitigated by statutory protection under Section 20 of the Securitisation Decree. Where the underlying financial assets are transferred to the SPE in accordance with an SEC-approved securitisation scheme and for fair value, such transfers are not subject to avoidance or revocation under the Bankruptcy Act. This reinforces the characterisation of the transfer as a true sale and ensures that the securitised assets are segregated from the originator’s insolvency estate.

In the absence of such protection, transfers could be challenged under the Bankruptcy Act. Accordingly, strict compliance with the approved securitisation scheme, proper documentation and arm’s-length structuring are essential to preserve bankruptcy remoteness and enforceability.

The SPE used in securitisation is structured as a newly set up company with limited-purpose, bankruptcy-remote entities in accordance with the Securitisation Decree and SEC requirements. Key features of the SPE typically include restrictions on activities (limited only to the approved securitisation), prohibition on incurring unrelated liabilities, and structural safeguards to ensure separation from the originator. While the concept of “orphan SPEs” or mandatory independent directors is not expressly required under Thai law, governance and organisational documents are usually tailored to reinforce independence and prevent commingling of assets or business operations. The principal objective is to ensure bankruptcy remoteness, supported by statutory asset segregation and the requirement that the SPE operates strictly within the approved securitisation scheme.

As regards insolvency risk, Thai law does not recognise “substantive consolidation” in the same manner as some common law jurisdictions. Provided that the transfer of assets qualifies for protection under Section 20 of the Securitisation Decree (ie, effected at fair value and in accordance with an approved scheme), the securitised assets should not form part of the originator’s insolvency estate.

The perfection of the assignment of right, the effectiveness of such assignment against the debtor or other third parties and the exemption as provided under the Securitisation Decree are addressed in 3.3 Principal Perfection Provisions.

In addition, to ensure enforceability against the originator and its creditors (including in insolvency), the transfer must also qualify for protection under Section 20 of the Securitisation Decree as mentioned in 6.1 Insolvency Laws, which supports the characterisation of the transaction as a true sale and protects it from avoidance under Thai bankruptcy law.

While formal “true sale opinions” are not a requirement under Thai law, it is common for legal counsel to provide opinions on the validity and enforceability of the assignment and related transaction documents.

Bankruptcy remoteness in Thai securitisation transactions is primarily achieved through a statutory true sale to the SPE under the Securitisation Decree. There are no widely used alternative structures (such as trust-based or synthetic arrangements) that achieve similar outcomes in practice.

Accordingly, isolation from the originator’s insolvency risk is mainly ensured through (i) compliance with the true sale requirements, (ii) operation of the SPE as a limited-purpose entity, and (iii) statutory protection under Section 20 of the Securitisation Decree, which prevents transferred assets from being subject to the originator’s insolvency proceedings.

While formal “insolvency opinions” are not required under Thai law, legal opinions are typically obtained in securitisation transactions to address, among other things, the validity of the asset transfer, enforceability of transaction documents, and the effectiveness of the structure in achieving bankruptcy remoteness.

Securitisation documents mitigate the risk of the SPE becoming bankrupt primarily through structural and contractual protections rather than relying solely on specific clauses.

Key mechanisms include the use of a limited-purpose SPE, whose activities are restricted to those relating to the securitisation, and the incorporation of limited recourse provisions, whereby creditors agree that their claims are limited to the assets of the SPE and have no recourse beyond the securitised asset pool. In addition, non-petition provisions are typically included, under which transaction parties agree not to initiate insolvency or rehabilitation proceedings against the SPE for a specified period.

These contractual protections are reinforced by statutory features under the securitisation regime, including asset segregation and the requirement that the SPE operates strictly in accordance with an approved securitisation scheme. Together, these measures help preserve the SPE’s bankruptcy-remote status.

The transfer of the underlying financial assets from the originator to the SPE are exempt from VAT and specific business tax pursuant to Royal Decrees Nos 333 and 334 (BE 2541 (1998)), respectively. In addition, stamp duty exemptions are available under Royal Decree No 335 (BE 2541 (1998)) for documents executed in connection with the securitisation.

Under Royal Decree No 441 (BE 2548 (2005)), income derived from an SEC-approved securitisation programme may be exempt, subject to conditions (eg, compliance with the approved cash flow allocation and restrictions on dividend distributions). Additional relief is available under Royal Decree No 389 (BE 2544 (2001)) in respect of bad debt reserves.

Thai tax law may impose withholding tax on cross-border payments (eg, interest or service fees) depending on the nature of the payment and the recipient’s jurisdiction. While there are no securitisation-specific rules in this respect, general withholding tax principles apply.

In practice, these risks are managed through transaction structuring, including aligning cash flows domestically where possible and relying on applicable double taxation agreements to reduce withholding tax exposure.

Apart from corporate income tax, VAT and Specific Business Tax (SBT) may be relevant. However, transfers of assets under an approved securitisation scheme are exempt from VAT and SBT. Uncertainty may arise in relation to certain ongoing services, but these are typically addressed within the general tax framework.

Formal tax opinions are not expressly required under Thai law, but are commonly obtained in securitisation transactions, particularly for cross-border or complex structures.

Such opinions typically confirm the availability of relevant tax exemptions (including VAT, SBT and stamp duty relief), the corporate income tax position of the SPE, and the absence (or mitigation) of withholding tax risks. They are usually subject to standard assumptions and qualifications, including compliance with the approved securitisation scheme and applicable tax laws.

Thai securitisation transactions may give rise to legal issues in connection with accounting treatment, particularly in relation to true sale analysis and consolidation of the SPE.

A key issue is whether the transfer of underlying financial assets qualifies as a sale (allowing derecognition) or is treated as a financing. Under Thai Financial Reporting Standards (aligned with IFRS), this depends on whether contractual rights, risks and rewards, and control have been transferred. Legal structuring must therefore align with these criteria, although legal characterisation as a true sale does not automatically determine accounting treatment, especially where the originator retains involvement (eg, through servicing, credit enhancement or repurchase obligations). It is also worth noting that characterisation as true sale under TFRS may automatically fall as true sale under the Thai Revenue Department for tax purpose as well.

In addition, consolidation of the SPE may arise if the originator is considered to have control under applicable accounting standards, based on factors such as decision-making power and exposure to returns. While legal features (eg, limited-purpose structures) support separation, accounting analysis focuses on substance over form.

Legal practitioners address accounting-related issues in securitisation through careful structuring and close coordination with financial and accounting advisers and auditors. This includes ensuring a true sale of underlying financial assets to support derecognition, limiting recourse and credit enhancement to achieve an appropriate transfer of risks and rewards, establishing the SPE as an independent, limited-purpose entity to support non-consolidation (where required), and structuring servicing arrangements on arm’s-length terms. These elements are designed to align the legal structure with the intended accounting treatment.

While not legally required, legal opinions are commonly obtained by transaction parties, investors and rating agencies. These typically cover key matters such as true sale, bankruptcy remoteness, enforceability of transaction documents, perfection of receivables assignment, and the proper establishment and authority of the SPE.

Such opinions are subject to standard assumptions and qualifications, including factual accuracy, proper authorisation and execution, and limitations under insolvency, public policy and general legal principles. Accounting treatment itself is generally outside the scope of legal opinions, but legal advisers typically work alongside auditors to ensure alignment between legal structure and accounting analysis.