LEGAL ISSUES IN USING FORMAL SCHOOL ENTERPRISES AS COLLATERAL UNDER THE BUSINESS SECURITY ACT B.E. 2558 (2015)

Abstract

Abstract

This research examines the principles, concepts, legal issues, and limitations regarding the use of formal schools as collateral in the form of a business under the Business Security Act B.E. 2558 (2015). It also examines relevant foreign laws, including those of the United Kingdom and the United States, in order to propose recommendations for improving Thai law to allow formal schools to effectively serve as collateral. This is a documentary research study, drawing from statutory provisions, academic literature, and legal case studies both domestic and international.

The findings reveal that 1) Although the Business Security Act allows businesses to be used as collateral, the use of formal schools in this capacity is not widely accepted by creditors. This reluctance stems from limitations related to the establishment of proprietary rights, enforcement of security interests, and specific legal restrictions applicable to formal schools. 2) The study of foreign laws, in comparison with the Thai context, reveals that the United Kingdom's floating charge system and the United States' UCC Article 9 provide a high degree of flexibility and allow businesses with characteristics of public service enterprises to be used as collateral. 3) Legal reform approaches and legal mechanisms. The researcher therefore recommends amending the Private Schools Act B.E. 2550 (2007), particularly with respect to borrowing and the use of school property as security, to align with the Business Security Act B.E. 2558 (2015). In addition, ministerial regulations or operational guidelines should be issued for formal schools that wish to use their businesses as collateral. A post-registration supervisory mechanism should be established, and clear security agreements should be developed to build creditor confidence and to promote access to funding for formal schools without compromising their public service mission or the rights of students and personnel.