Line Of Credit Agreement for Hong Kong

Line Of Credit Agreement Template for Hong Kong

A comprehensive legal agreement governed by Hong Kong law that establishes a revolving credit facility between a lender and borrower. The agreement sets out the terms under which the borrower can repeatedly draw down funds up to a predetermined limit, repay, and reborrow during the facility period. It includes detailed provisions on interest calculations, fees, drawdown mechanics, conditions precedent, representations, covenants, and events of default, all compliant with Hong Kong banking regulations and financial laws. The document incorporates specific requirements under Hong Kong's Banking Ordinance and related financial regulations.

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What is a Line Of Credit Agreement?

The Line of Credit Agreement is a fundamental financing document used in Hong Kong's banking and financial services sector when a borrower requires flexible access to funding. This agreement establishes a revolving credit facility where the borrower can draw down funds multiple times up to a maximum limit, repay, and reborrow as needed. It's particularly useful for businesses managing working capital, funding ongoing operations, or having seasonal financing needs. The document must comply with Hong Kong's Banking Ordinance, Money Lenders Ordinance, and other relevant financial regulations. The agreement typically includes comprehensive terms covering facility mechanics, interest calculations, security arrangements, borrower obligations, and lender rights, structured to provide clarity and protection for all parties while ensuring regulatory compliance in Hong Kong's financial framework.

What sections should be included in a Line Of Credit Agreement?

1. Parties: Identifies and defines the Lender and the Borrower with their full legal names and addresses

2. Background: Explains the context of the agreement and the parties' intention to enter into a line of credit arrangement

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes rules of interpretation

4. The Facility: Details the nature and amount of the credit facility, including the credit limit and purpose

5. Conditions Precedent: Lists conditions that must be satisfied before the facility becomes available

6. Drawing and Operation of the Facility: Specifies how and when the Borrower can draw down on the facility

7. Interest and Fees: Sets out interest rates, calculation methods, and applicable fees

8. Repayment: Details repayment terms, minimum payments, and payment procedures

9. Representations and Warranties: States the Borrower's representations and warranties regarding their legal and financial status

10. Covenants: Lists positive and negative covenants the Borrower must observe

11. Events of Default: Defines circumstances constituting default and consequences thereof

12. Termination: Specifies conditions and procedures for terminating the facility

13. General Provisions: Contains standard clauses including notices, amendments, governing law, and jurisdiction

What sections are optional to include in a Line Of Credit Agreement?

1. Security: Include when the facility is secured by collateral or guarantees

2. Guarantee: Include when there are third-party guarantors for the facility

3. Insurance: Include when specific insurance requirements are imposed on the Borrower

4. Special Drawing Conditions: Include when there are specific conditions for particular types of drawings

5. Cross-Default: Include when default under other specified agreements triggers default under this facility

6. Assignment and Transfer: Include when either party may need to assign or transfer their rights

7. Syndication Provisions: Include for facilities that may be syndicated to multiple lenders

8. Foreign Currency Provisions: Include when drawings can be made in multiple currencies

What schedules should be included in a Line Of Credit Agreement?

1. Schedule 1 - Conditions Precedent Documents: Lists all documents required before first drawdown

2. Schedule 2 - Form of Drawdown Notice: Template for Borrower to request drawings under the facility

3. Schedule 3 - Calculation of Interest and Fees: Detailed methodology for calculating interest and fees

4. Schedule 4 - Repayment Schedule: If applicable, schedule of repayment dates and amounts

5. Schedule 5 - Security Documents: List and copies of security documents if facility is secured

6. Appendix A - Facility Terms Summary: Summary of key commercial terms including facility limit, interest rates, and fees

7. Appendix B - Compliance Certificate: Template for periodic compliance certification by Borrower

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Hong Kong

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking and Financial Services

Real Estate

Manufacturing

Retail and Consumer

Technology

Healthcare

Construction

Import/Export

Logistics

Professional Services

Hospitality

Energy and Resources

Relevant Teams

Legal

Finance

Treasury

Credit Risk

Compliance

Corporate Banking

Operations

Risk Management

Corporate Finance

Banking Operations

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Financial Controller

Credit Manager

Relationship Manager

Legal Counsel

Compliance Officer

Risk Manager

Corporate Banking Officer

Credit Analyst

Finance Manager

Banking Operations Manager

Company Secretary

Account Manager

Corporate Finance Director

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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