Since the global economic downturn, cash pooling has become an increasingly relevant option for multinational corporations (MNCs) as a cash management technique. In general, cash pooling is used when MNCs wish to reduce their external financing needs and allow one company, a “corporate treasury centre”, to manage inter-group financing.
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As each group company normally has its own accounts, these separate accounts are “pooled” together and managed as one net account, allowing group companies to operate under a single financial policy. Through this method, each group company needs less cash and can decrease its working capital.
As cash pooling schemes are often implemented by MNCs with subsidiaries worldwide, in the case of foreign companies operating in Thailand that have cash pooling accounts set up outside Thailand, the following legal issues arise under Thai law.
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HARIT NA POMBEJRA is a partner at Silk Legal in Bangkok.
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