Loan Facility Agreement for Malaysia

Loan Facility Agreement Template for Malaysia

A comprehensive legal document governed by Malaysian law that establishes the terms and conditions under which a lender provides financial facilities to a borrower. The agreement complies with the Financial Services Act 2013 and other relevant Malaysian banking regulations, incorporating both conventional and Islamic banking principles where applicable. It details the facility amount, interest rates, repayment terms, security arrangements, conditions precedent, representations and warranties, covenants, and events of default, while ensuring compliance with Bank Negara Malaysia guidelines and local regulatory requirements.

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What is a Loan Facility Agreement?

The Loan Facility Agreement is a crucial document in Malaysian banking and finance transactions, used when a financial institution provides funding to borrowers for various business or personal purposes. This agreement must comply with Malaysian banking regulations, including the Financial Services Act 2013 and Bank Negara Malaysia guidelines, while potentially accommodating Islamic banking principles under the Islamic Financial Services Act 2013. It captures all essential elements of the lending relationship, including facility terms, security arrangements, borrower obligations, and lender rights. The document is particularly important in Malaysia's dynamic financial landscape, where both conventional and Islamic banking systems operate concurrently, requiring careful consideration of regulatory compliance and market practices.

What sections should be included in a Loan Facility Agreement?

1. Parties: Identification of the lender(s) and borrower(s) with full legal names and registration details

2. Background: Context of the loan facility, including purpose and key commercial terms agreed

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

4. The Facility: Details of the loan facility including amount, purpose, and availability period

5. Conditions Precedent: Conditions that must be satisfied before the facility can be drawn

6. Drawdown: Procedures and requirements for drawing down the facility

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

8. Repayment: Terms and schedule for repayment of the facility

9. Representations and Warranties: Statements of fact and assurances given by the borrower

10. Covenants: Positive and negative obligations of the borrower during the facility period

11. Events of Default: Circumstances that constitute default and consequences thereof

12. Security: Overview of security arrangements for the facility

13. Payments: Payment mechanics, currency, and timing requirements

14. Changes to Parties: Rules regarding assignment and transfer of rights and obligations

15. Notices: Communication requirements and contact details

16. General Provisions: Miscellaneous legal provisions including governing law and jurisdiction

What sections are optional to include in a Loan Facility Agreement?

1. Islamic Banking Provisions: Required when the facility needs to be Shariah-compliant, including specific Islamic financing structures

2. Syndication Provisions: Required for syndicated facilities involving multiple lenders

3. Guarantee: Include when there are guarantors for the facility

4. Intercreditor Provisions: Required when there are multiple creditors with different priorities

5. Currency Provisions: Required for multi-currency facilities

6. Insurance: Detailed insurance requirements when specific insurance coverage is required

7. Tax Provisions: Detailed tax provisions when complex tax implications exist

8. Agency Provisions: Required when a facility agent is appointed in syndicated facilities

What schedules should be included in a Loan Facility Agreement?

1. Schedule 1 - Conditions Precedent: Detailed list of documents and conditions required before facility utilization

2. Schedule 2 - Form of Drawdown Notice: Template for borrower to request drawdown of the facility

3. Schedule 3 - Repayment Schedule: Detailed repayment dates and amounts

4. Schedule 4 - Security Documents: List and details of all security documents

5. Schedule 5 - Form of Transfer Certificate: Template for transferring rights and obligations under the facility

6. Schedule 6 - Calculation of Interest: Detailed methodology for interest calculation

7. Schedule 7 - Facility Specific Terms: Specific commercial terms of the facility

8. Schedule 8 - Properties: Details of any properties provided as security

9. Appendix A - Form of Legal Opinion: Template for legal opinion required from borrower's counsel

10. Appendix B - Form of 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

Jurisdiction

Malaysia

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use

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