The short answer: a non-recourse stock loan is safer for everything you own beyond the pledged shares, because the lender's only remedy is those shares — if their value falls short of the loan, the lender absorbs the gap and no claim follows you. A full-recourse loan is cheaper, with a higher headline loan-to-value and a tighter rate, but it makes you personally liable for any shortfall, re-coupling the loan to your wider balance sheet. "Safer" therefore depends on what you are protecting. If the priority is ring-fencing your other assets, non-recourse wins; if the priority is the lowest cost on a position you have high conviction in, full-recourse can be rational. Most considered transactions settle somewhere in between.
Key takeaways
- Non-recourse caps your worst case at the loss of the pledged shares — the cleanest downside protection a stock loan offers.
- Full-recourse prices tighter and lends more, but exposes assets the loan was never meant to touch.
- Limited-recourse sits between the two: a defined personal backstop that improves the economics without putting the whole estate on the table.
- Headline LTV and rate are outputs of the recourse decision, not independent of it — the same 50% LTV means two different risks under two different profiles.
- In Thailand, enforcement runs through the SET, so realisable value on a forced sale can sit well below the screen price — the gap a non-recourse lender absorbs.
What "recourse" actually means
Recourse describes how far a lender can reach if the pledged collateral falls short of the outstanding balance. When a major shareholder borrows against a SET- or mai-listed position, the conversation usually opens with two numbers — the loan-to-value and the rate. Both matter, but neither tells you what happens if the share price falls hard and the collateral is worth less than what was advanced. That answer lives in the recourse profile, the term most often decided by default rather than by design.
The three profiles
Non-recourse
The lender's remedy is limited to the pledged shares and nothing else. If the position is liquidated and the proceeds do not cover the loan, the lender absorbs the shortfall and the borrower walks away — the obligation is extinguished against the collateral, with no claim reaching their home, their other holdings, or the rest of the family balance sheet. For a borrower, this is the cleanest cap on downside that share-backed financing offers: the worst case is the loss of the pledged shares, bounded and known on day one.
Limited or partial-recourse
The negotiated middle. Limited-recourse caps the borrower's personal exposure at an agreed amount, a percentage of the shortfall, or a defined top-up obligation, while leaving the rest non-recourse. A borrower unwilling to write a blank cheque on their wider estate but comfortable standing behind, say, the first tranche of any shortfall can often unlock materially better terms than a pure non-recourse line would carry. Much of the more thoughtful structuring happens here.
Full-recourse
The mirror image of non-recourse. The borrower is personally liable for any shortfall after the collateral is realised. If the shares sell for less than the outstanding balance, the lender can pursue the borrower for the difference, reaching into other assets to make itself whole. The loan is, in effect, a personal obligation that happens to be secured by shares — the pledge is the first source of repayment, not the only one.
How the three compare
| Feature | Non-recourse | Limited-recourse | Full-recourse |
|---|---|---|---|
| Liability beyond the shares | None — lender absorbs any shortfall | Capped — a defined, agreed backstop | Full — borrower covers the entire gap |
| Typical LTV | Lower — the cushion is the lender's only protection | Moderate — set by the size of the backstop | Higher — the lender can fall back on the borrower |
| Typical pricing | Wider — the lender prices for the tail risk | Between the two — tied to residual exposure | Tighter — least risk to the lender |
| Who it suits | Protecting the wider estate; capping downside at the collateral | Improving economics without exposing the whole balance sheet | High conviction, ample other liquidity, cost-led objectives |
Why the profile costs more than the rate
The trade-offs follow directly from who carries the price risk. A non-recourse structure hands the lender the tail risk of the position, and the lender prices for it: a non-recourse facility typically prices wider and lends at a lower LTV, because the cushion between the advance and the share value is the lender's only protection. The borrower pays for the privilege of capping their downside at the collateral.
Full-recourse runs the other way. Because the lender can fall back on the borrower personally, it can lend more aggressively and price tighter. The headline economics look better — more cash, lower cost — but the borrower has quietly re-coupled the loan to assets that were never meant to be on the table. A founder who took a full-recourse loan to avoid selling a block can, in a severe drawdown, lose both the shares and face a personal claim. We unpack how rate, LTV, and structure interact in our note on Thai stock loan interest rates and fees.
The cheapest loan is rarely the safest one. What you save in basis points on a full-recourse line, you may pay for many times over in a position you no longer control.
This is why headline LTV and rate are best read as outputs of the recourse decision, not inputs to it. Two facilities quoted at 50% LTV are not comparable if one is non-recourse and the other reaches your whole estate. How much you can borrow at all is itself a function of the underlying share — a theme we cover in how much you can borrow against Thai shares — and recourse sits on top of that, shaping the safety of every baht advanced. The term itself is defined in our glossary entry on recourse.
Thai enforcement realities
Recourse is not an abstraction in Thailand — it is shaped by how a pledge is actually enforced. Collateral in a Thai stock loan typically stays in the borrower's own account at a designated custodian and is held in book-entry form at the Thailand Securities Depository (TSD), with the lender's security arising from its rights and control over that account, and enforcement on default means selling listed shares into the SET market, subject to the same liquidity and free-float constraints that governed the LTV in the first place. A concentrated founder holding cannot be liquidated instantly without moving the price against the seller, so the realised value on enforcement can sit well below the screen price the day a margin call is triggered.
That gap between mark-to-market value and realisable value is precisely the risk a non-recourse lender absorbs and a full-recourse borrower retains. It also interacts with disclosure: a forced sale that crosses reporting thresholds under the Securities and Exchange Act B.E. 2535 can itself signal distress to the market, deepening the very price decline that triggered enforcement. A position near such a threshold is best sized and structured with that in mind. Whether a holding sits near a reporting threshold under the Securities and Exchange Act B.E. 2535 is a matter for your own Thai legal counsel, engaged in parallel; we act as arranger and introducer and do not provide legal or regulatory advice. We are glad to coordinate around that analysis as part of our process.
Margin mechanics and the maintenance line
Recourse and margining work as a pair. Most facilities carry a maintenance LTV — a line that, if breached as the share falls, triggers a call for additional collateral or a partial paydown. How that call is handled depends on the recourse profile. Under a non-recourse line, a borrower who chooses not to meet a margin call is, in effect, electing to surrender the shares; there is no further claim. Under a full-recourse line, declining the call simply defers the shortfall onto the borrower personally once the position is closed out.
The practical consequence is that the recourse profile changes how a borrower should think about volatility. A non-recourse borrower can hold through a drawdown knowing the collateral is the ceiling on their loss. A full-recourse borrower must manage the position far more actively, because the cost of being wrong does not stop at the shares.
Matching the profile to the objective
There is no universally correct answer. The right profile depends on what the borrower is trying to achieve:
- Protecting the wider estate. A shareholder whose first priority is ring-fencing everything beyond the listed position — common where the holding is one part of a diversified family balance sheet — will usually accept the wider pricing and lower LTV of a non-recourse line as the cost of certainty.
- Maximising proceeds at the lowest cost. A borrower with high conviction in the position, ample other liquidity, and a tolerance for personal exposure may rationally choose full-recourse to raise more capital at a tighter rate.
- Threading the middle. Many of the transactions we arrange settle on a limited-recourse structure — a defined personal backstop that improves the economics without exposing the entire balance sheet. The art lies in sizing that backstop to the borrower's real risk tolerance, not the lender's preference.
The decision also interacts with tenor and intent. A short-dated facility taken to bridge a known liquidity event tolerates a different profile than an open-ended line meant to sit against a core holding for years. Aligning the recourse profile with the purpose of the capital is what separates a financing that serves the shareholder from one that merely funds them.
So, which is safer?
For protecting your wider wealth, non-recourse is unambiguously the safer structure — your downside is capped at the shares you chose to pledge, and nothing else is at risk. Full-recourse is cheaper and lends more, but it trades that safety for headline economics. Recourse is the term we ask borrowers to consider first and decide deliberately, because it determines not just the cost of the loan but the shape of the worst case — and the worst case is the only scenario in which the structure of a facility truly matters. A few basis points are recoverable. A personal claim that arrives after the collateral is gone is not.
This note is general information about how recourse profiles function in Thai share-backed financing. It is not legal, tax, or financial advice, and no structure should be selected without reference to a borrower's specific position and objectives. If you would like to discuss which profile fits your holding, a principal will respond directly.