Loss Share Agreement for Malaysia

Loss Share Agreement Template for Malaysia

A Loss Share Agreement governed by Malaysian law is a contractual arrangement where parties agree to share potential losses arising from specific assets or transactions. This agreement, structured within Malaysia's legal framework including the Financial Services Act 2013 and Contracts Act 1950, establishes detailed mechanisms for loss calculation, claim procedures, and payment obligations. It typically includes provisions for regulatory compliance, reporting requirements, and dispute resolution procedures specific to the Malaysian jurisdiction, while addressing local banking and financial sector requirements.

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What is a Loss Share Agreement?

Loss Share Agreements are crucial instruments in Malaysian financial and corporate transactions, particularly in scenarios involving asset transfers, acquisitions, or risk-sharing arrangements. These agreements become especially relevant during bank acquisitions, asset purchases, or corporate restructuring where parties need to allocate potential losses. The Loss Share Agreement details the mechanism for identifying, calculating, and sharing losses, while ensuring compliance with Malaysian regulatory requirements, including those under the Financial Services Act 2013 and relevant Bank Negara Malaysia guidelines. The document typically includes specific thresholds, time frames, and procedures for loss claims, making it essential for risk management and transaction structuring in the Malaysian context.

What sections should be included in a Loss Share Agreement?

1. Parties: Identification of the parties entering into the loss share agreement

2. Background: Context of the agreement, including the transaction or arrangement giving rise to the loss sharing

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

4. Scope of Loss Sharing: Definition of covered losses and assets subject to loss sharing

5. Loss Share Mechanics: Detailed methodology for calculating and allocating losses between parties

6. Claims Process: Procedures and requirements for submitting and processing loss claims

7. Payment Terms: Timeline and mechanics for loss share payments

8. Representations and Warranties: Standard representations and warranties from both parties

9. Reporting Requirements: Regular reporting obligations and documentation requirements

10. Audit and Verification Rights: Rights and procedures for verifying losses and claims

11. Dispute Resolution: Procedures for resolving disputes between parties

12. Term and Termination: Duration of the agreement and termination provisions

13. Confidentiality: Protection of confidential information shared under the agreement

14. General Provisions: Standard boilerplate clauses including notices, amendments, governing law

What sections are optional to include in a Loss Share Agreement?

1. Regulatory Compliance: Specific provisions for compliance with banking or financial regulations, required when parties are regulated entities

2. Third Party Claims: Procedures for handling third party claims, needed when covered losses may involve third party actions

3. Asset Management Requirements: Specific requirements for managing covered assets, relevant for agreements involving ongoing asset management

4. Recovery Sharing: Provisions for sharing any recoveries on losses, important when recoveries are possible

5. Special Asset Categories: Specific provisions for particular asset types, needed when agreement covers diverse asset categories

6. Change in Law Provisions: Mechanisms for dealing with regulatory changes, important in long-term agreements

7. Tax Provisions: Specific tax-related provisions, needed when tax implications are significant

What schedules should be included in a Loss Share Agreement?

1. Schedule 1 - Covered Assets: Detailed list and description of assets subject to loss sharing

2. Schedule 2 - Loss Calculation Methodology: Detailed mathematical formulas and examples for loss calculations

3. Schedule 3 - Claims Documentation Requirements: Specific requirements for documentation supporting loss claims

4. Schedule 4 - Reporting Templates: Standard templates for required regular reporting

5. Schedule 5 - Loss Share Thresholds: Specific thresholds and percentages for loss sharing arrangements

6. Appendix A - Claim Forms: Standard forms for submitting loss share claims

7. Appendix B - Contact Details: Key contact information for both parties

8. Appendix C - Compliance Requirements: Detailed regulatory compliance requirements if applicable

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

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking

Financial Services

Insurance

Investment Management

Real Estate

Corporate Restructuring

Asset Management

Private Equity

Mergers and Acquisitions

Government and Public Sector

Relevant Teams

Legal

Finance

Risk Management

Compliance

Treasury

Corporate Development

Investment

Asset Management

Due Diligence

Corporate Finance

Portfolio Management

Credit Risk

Regulatory Affairs

Relevant Roles

Chief Financial Officer

Risk Manager

Legal Counsel

Compliance Officer

Financial Controller

Asset Manager

Investment Director

Treasury Manager

Corporate Finance Manager

Business Development Director

Chief Risk Officer

Portfolio Manager

Transaction Manager

Restructuring Specialist

Due Diligence 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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