The Intercompany Revolving Loan Agreement is essential for multinational corporations and group companies operating in or through Hong Kong that require flexible financing arrangements between their affiliated entities. This document is typically used when a group company with excess funds provides financing to another group company with funding needs, allowing for multiple drawdowns and repayments within an agreed facility limit. The agreement must comply with Hong Kong corporate law, financial regulations, and transfer pricing requirements, particularly regarding arm's length terms and documentation. It includes provisions for facility limits, interest calculations, drawdown mechanics, representations, and corporate authorizations, making it suitable for ongoing group treasury operations and efficient capital management.
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1. Parties: Identification of the lender and borrower companies, including registration details
2. Background: Context of the intercompany arrangement and relationship between the parties
3. Definitions and Interpretation: Key terms used in the agreement, including financial definitions and calculation methodologies
4. The Facility: Details of the revolving loan facility, including the commitment amount and purpose
5. Conditions Precedent: Documents and conditions required before the facility can be utilized
6. Drawdown Mechanics: Procedures and requirements for requesting and making drawdowns
7. Interest: Interest rate, calculation method, and payment provisions
8. Repayment and Prepayment: Terms for repayment and voluntary prepayment of the loan
9. Tax Provisions: Treatment of taxes, including withholding tax and transfer pricing compliance
10. Representations and Warranties: Standard corporate representations and specific declarations regarding the loan arrangement
11. Undertakings: Ongoing obligations of the borrower during the life of the facility
12. Events of Default: Circumstances that trigger default and remedies available to the lender
13. Changes to Parties: Provisions regarding assignment and transfer rights
14. Administration: Notice requirements, calculations, and other administrative matters
15. Governing Law and Jurisdiction: Hong Kong law as governing law and jurisdiction provisions
1. Security: Include if any security is to be provided for the loan facility
2. Guarantee: Include if a parent company or other group company guarantee is required
3. Subordination: Include if the loan needs to be subordinated to other group company debt
4. Set-off Rights: Include if specific set-off provisions are required between group companies
5. Transfer Pricing Compliance: Include detailed transfer pricing provisions if significant inter-jurisdictional lending
6. Currency Provisions: Include if loans can be drawn in multiple currencies
7. Tax Gross-up: Include detailed tax gross-up provisions if lending across jurisdictions
1. Form of Drawdown Request: Standard form for requesting drawdowns under the facility
2. Conditions Precedent Documents: List of required documents and conditions to be satisfied
3. Calculation of Interest Rate: Detailed methodology for interest calculations and adjustments
4. Form of Transfer Certificate: Standard form for transferring rights under the agreement
5. Group Structure Chart: Corporate structure showing relationship between parties
6. Transfer Pricing Documentation: Required documentation to support arm's length nature of terms
7. Repayment Schedule: If applicable, schedule of planned repayment dates and amounts
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