Loan Note for Malaysia

Loan Note Template for Malaysia

A legally binding financial instrument governed by Malaysian law that documents a loan agreement between a lender and borrower. The document sets out the key terms of the lending arrangement, including the principal amount, interest rate, repayment terms, and any security arrangements. It incorporates provisions compliant with Malaysian financial regulations, including the Financial Services Act 2013 and Contracts Act 1950, and can be used for both corporate and individual lending arrangements. The document includes necessary protections for both parties and mechanisms for enforcement under Malaysian jurisdiction.

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What is a Loan Note?

This Loan Note template is designed for use in Malaysian financing transactions, providing a standardized framework for documenting loan arrangements while ensuring compliance with Malaysian financial regulations and contract law. The document is commonly used when a lender provides financing to a borrower and requires formal documentation of the debt obligation. A Loan Note typically includes essential terms such as loan amount, interest calculations, repayment schedule, events of default, and enforcement mechanisms. It can be adapted for various financing scenarios, from simple bilateral loans to more complex arrangements involving security or guarantees, and is particularly relevant for corporate financing, property purchases, or business expansion projects in Malaysia.

What sections should be included in a Loan Note?

1. Parties: Identification of the lender and borrower with full legal names and addresses

2. Background: Brief context of the loan arrangement and relationship between parties

3. Definitions: Key terms used throughout the document

4. Loan Amount and Purpose: Specification of the principal amount and intended use of funds

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

6. Repayment Terms: Schedule of repayments, payment methods, and prepayment provisions

7. Conditions Precedent: Conditions that must be satisfied before the loan is advanced

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

9. Covenants: Ongoing obligations of the borrower during the loan term

10. Events of Default: Circumstances that would trigger default and remedies available

11. Payments: Payment mechanics, currency, and treatment of non-business days

12. Costs and Expenses: Allocation of transaction costs and enforcement expenses

13. Notices: Process for formal communications between parties

14. Governing Law and Jurisdiction: Confirmation of Malaysian law and jurisdiction

What sections are optional to include in a Loan Note?

1. Security: Required if the loan is secured - details of security arrangements and enforcement rights

2. Guarantee: Required if there is a guarantor for the loan

3. Tax Gross Up: Include if tax withholding provisions are relevant to the transaction

4. Assignment and Transfer: Include if the note is intended to be transferable

5. Information Undertakings: Include for corporate borrowers - obligations to provide financial information

6. Financial Covenants: Include for corporate borrowers - specific financial metrics to be maintained

7. Change of Control: Include for corporate borrowers - consequences of ownership changes

8. Multiple Lenders: Required if there is more than one lender

What schedules should be included in a Loan Note?

1. Repayment Schedule: Detailed amortization table showing payment dates and amounts

2. Form of Drawdown Notice: Standard form for requesting loan disbursement

3. Conditions Precedent Documents: List of required documents to be provided before drawdown

4. Security Details: Detailed description of any security assets and registration requirements

5. Form of Transfer Certificate: Standard form for transferring the note if transferable

6. Calculation of Interest: Detailed methodology for interest calculations and examples

7. Financial Covenants Calculations: Formulae and definitions for financial covenant calculations

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

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking & Financial Services

Real Estate & Property

Manufacturing

Trading & Commerce

Technology & Software

Construction & Infrastructure

Healthcare

Agriculture

Energy & Resources

Retail & Consumer Goods

Relevant Teams

Legal

Finance

Treasury

Credit Risk

Compliance

Corporate Secretariat

Commercial

Banking Operations

Investment

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Lawyer

Loan Officer

Credit Manager

Risk Manager

Company Secretary

Financial Controller

Commercial Director

Business Development Manager

Investment Manager

Compliance Officer

Banking Relationship 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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