BANGKOK - Thai opposition party Future Forward is facing dissolution as the Election Commission (EC) on Wednesday (Dec 11) agreed to file a motion at the Constitutional Court to dissolve the party over a loan from its leader Thanathorn Juangroongruangkit.

Mr Thanathorn's 191-million-baht (S$8.6 million) loan to his party earlier this year for political activities was deemed a donation from an illegal source, the EC said.

Section 66 of an electoral law caps legal donations from any individuals at 10 million baht, but there has been no specific legal clause that bars any party leader, member or outsider from issuing a loan to a party.

The loan is unprecedented as political parties in Thailand are typically funded by donations from key members and supporters. Mr Thanathorn, a scion of Thailand's largest auto part maker, said he lent the money instead of funding the party himself to downplay his tycoon image.

According to party secretary-general Piyabutr Saengkanokkul, part of the loan has been paid back to Mr Thanathorn.

"There is nothing that could be deemed illegal, but the decision is in line with our expectation," Future Forward's spokesman Pannika Wanich told The Straits Times, referring to plans by the party's opponents to seek its dissolution.

This is the second case seeking the party's dissolution at the Constitutional Court.

A petition was filed in July by lawyer Natthaporn Toprayoon, a former adviser to Thailand's chief ombudsman, accusing the party of seeking to overthrow the constitutional monarchy. He alleged that Future Forward is linked to the Illuminati, a secret society believed by conspiracy theorists to be the puppet masters controlling the world.

The EC decision comes three weeks after Mr Thanathorn, 41, was disqualified as an elected Member of Parliament by the Constitutional Court over his ownership of shares in the media, which was ruled to be in violation of the Constitution.

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His disqualification can lead to the EC filing a criminal lawsuit against him at the Supreme Court. If he is found guilty of running for office as an unqualified candidate, he faces up to 10 years in prison and a fine of up to 200,000 baht. His conviction can also be used to file a motion for the party to be dissolved.

According to Mr Thanathorn, the loan case is among a total of 28 cases against him and his party that they deem politically motivated due to their anti-military stance. He is also facing a sedition charge for allegedly aiding an anti-junta protest in 2015.

The party is currently campaigning against conscription, while proposing voluntary enlistment instead.

It is the only party in Parliament voting against Thai King Maha Vajiralongkorn's decree that transferred two key army units under his direct control in October, saying that the process was not according to the laws. No other parties in the country's history have publicly challenged a royal matter.

Future Forward surprised many when it won 81 seats in the March election, the first election since the May 2014 coup, when none of its members had run for office before. It was the third-best-performing party in the elections, surpassing the Democrats, Thailand's oldest party, which scooped up only 53 seats.

Following Mr Thanathorn's disqualification and a Future Forward MP's resignation, the party's lawmakers are down to 79.

Former army chief Prayut Chan-o-cha became Prime Minister after seizing power in the 2014 coup. He was elected to his second term in March with the backing of pro-military Palang Pracharat Party and the rubber stamp Senate.