Loan Agreement Between Parent Company And Subsidiary for Malaysia

Loan Agreement Between Parent Company And Subsidiary Template for Malaysia

A comprehensive legal agreement governed by Malaysian law that establishes and regulates a loan arrangement between a parent company (as lender) and its subsidiary (as borrower). The document outlines the terms and conditions of the loan, including principal amount, interest rates, repayment terms, security arrangements (if any), and compliance requirements under Malaysian corporate and financial regulations. It incorporates necessary provisions for transfer pricing compliance, tax considerations, and corporate governance requirements specific to related-party transactions in Malaysia.

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What is a Loan Agreement Between Parent Company And Subsidiary?

The Loan Agreement Between Parent Company And Subsidiary is a crucial document for intra-group financing in Malaysia, commonly used when a parent company provides financial support to its subsidiary for various business purposes such as working capital, expansion, or asset acquisition. This agreement must comply with Malaysian corporate law, particularly the Companies Act 2016, and consider transfer pricing regulations to ensure arm's length transactions. The document typically includes detailed terms about loan amount, interest rates, repayment schedule, events of default, and any security arrangements, while addressing specific Malaysian regulatory requirements for related-party transactions. It's particularly important for corporate groups operating in Malaysia to document these arrangements properly for both legal compliance and tax purposes.

What sections should be included in a Loan Agreement Between Parent Company And Subsidiary?

1. Parties: Identification of the parent company as lender and subsidiary as borrower, including registration numbers and registered addresses

2. Background: Context of the loan arrangement, relationship between parties, and purpose of the loan

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. The Loan: Principal amount, purpose, and drawdown conditions

5. Interest: Interest rate, calculation method, and payment terms

6. Repayment: Repayment schedule, prepayment provisions, and payment mechanics

7. Representations and Warranties: Standard representations by the borrower regarding its status, capacity, and financial condition

8. Covenants: Positive and negative obligations of the borrower during the loan term

9. Events of Default: Circumstances constituting default and consequences

10. Tax Provisions: Treatment of taxes, withholding requirements, and transfer pricing compliance

11. Notices: Method and addresses for formal communications

12. Governing Law and Jurisdiction: Malaysian law as governing law and jurisdiction for disputes

13. General Provisions: Standard boilerplate clauses including amendments, assignments, and severability

What sections are optional to include in a Loan Agreement Between Parent Company And Subsidiary?

1. Security: Details of any security or collateral for the loan - include when loan is secured

2. Guarantee: Terms of any guarantee provided - include when there is a third-party guarantor

3. Conditions Precedent: Pre-conditions for loan disbursement - include for complex or large loans

4. Financial Covenants: Specific financial ratios and requirements - include for larger loans or when borrower's financial health needs monitoring

5. Information Covenants: Specific reporting requirements - include when regular financial monitoring is needed

6. Change of Control: Provisions dealing with changes in ownership - include when relevant to loan terms

7. Assignment and Transfer: Detailed provisions for transferring loan rights - include when transfer rights are important

What schedules should be included in a Loan Agreement Between Parent Company And Subsidiary?

1. Loan Details: Detailed breakdown of loan amount, interest rate, and payment schedule

2. Drawdown Notice: Form of notice for requesting loan disbursement

3. Repayment Schedule: Detailed amortization or repayment schedule

4. Security Details: Description of security or collateral (if applicable)

5. Conditions Precedent Documents: List of required documents and conditions for loan disbursement

6. Calculation of Interest: Detailed methodology for interest calculation

7. Form of Compliance Certificate: Template for periodic compliance reporting

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

Malaysia

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Manufacturing

Technology

Real Estate

Construction

Retail

Healthcare

Financial Services

Energy

Telecommunications

Agriculture

Mining

Transportation

Hospitality

Relevant Teams

Legal

Finance

Treasury

Tax

Compliance

Corporate Secretarial

Risk Management

Corporate Finance

Executive Management

Relevant Roles

Chief Financial Officer

Financial Director

Legal Counsel

Corporate Lawyer

Treasury Manager

Finance Manager

Company Secretary

Tax Manager

Compliance Officer

Corporate Finance Manager

Financial Controller

Managing Director

Group Financial Controller

Legal Director

Risk Manager

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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