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exceeding 2 years and/or a fine not exceeding Baht
(36)
200,000. On the other hand, Thai law does not impose
maximum rate for loan default interest. The lender and
the borrower can freely agree to any rate, provided that
in the absence of such agreement, the default interest
rate of 7.5% per annum as prescribed under Section 224
of the CCC will apply. However, the amount of loan
default interest may be deemed as a penalty which may
be reduced to an amount that the court deems to be
(37)
reasonable on a case-by-case basis.
It is typical for the loan or credit facilities agreement to
stipulate that repayment of debt is mandatory once the
portfolio company earns profits, and early redemption is
triggered by the event of default.
3.2.3 Hybrid Financing
For hybrid financing, the underlying agreement typically
provides for a term that debt is exchangeable into
equity - constituting a hybrid of debt and equity
financing. As such, the legal requirements for the debt
financing as discussed in Paragraph 3.2.2 will apply to
the hybrid financing as well.
(36)
Section 654 of the CCC; Section 4 of the Act Prohibiting the Collection of Interest at an
Excessive Rate of Thailand 2017.
(37)
Sections 379 of the CCC.
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