Revolving Promissory Note Template for Hong Kong

When you need flexible financing arrangements in Hong Kong, a revolving promissory note provides a sophisticated legal framework for ongoing credit facilities. This negotiable instrument allows you to establish a predetermined credit limit while maintaining the flexibility to draw down and repay funds multiple times throughout the facility period.

When do you need this document?

You need a revolving promissory note when your business requires ongoing access to credit facilities for working capital management, seasonal inventory financing, or bridging temporary cash flow gaps. Financial institutions use these instruments to formalize credit lines for corporate clients, while businesses benefit from the flexibility to access funds as needed without renegotiating terms each time. This document is particularly valuable for trading companies, manufacturing businesses with cyclical operations, or any enterprise requiring predictable access to short-term financing. Property developers also commonly use revolving facilities to manage construction financing and project cash flows.

Key legal considerations

Your revolving promissory note must contain an unconditional promise to pay to qualify as a negotiable instrument under Hong Kong law. The document should clearly specify the maximum facility amount, interest calculation methods, drawdown procedures, and repayment terms. You must include provisions for events of default, acceleration clauses, and enforcement mechanisms to protect the lender's interests. Security arrangements, if applicable, should be properly documented and registered where required. The revolving nature requires careful drafting of availability periods, review dates, and conditions precedent for each drawdown. Consider including representations, warranties, and ongoing covenants to ensure the borrower maintains creditworthiness throughout the facility term.

Legal requirements in Hong Kong

Under the Bills of Exchange Ordinance (Cap. 19), your promissory note must be in writing, signed by the maker, and contain an unconditional promise to pay a sum certain in money. Stamp duty obligations under the Stamp Duty Ordinance (Cap. 117) may apply depending on the facility amount and structure. If the lender is not a licensed bank, ensure compliance with the Money Lenders Ordinance (Cap. 163) to avoid usury violations. Corporate borrowers must ensure proper authorization under the Companies Ordinance (Cap. 622), including board resolutions and execution by authorized signatories. The document should specify Hong Kong law as the governing law and Hong Kong courts as having jurisdiction for disputes. Consider whether the facility requires registration as a charge if secured against company assets, and ensure compliance with any regulatory requirements specific to your industry or the nature of the underlying business.