Pre Financing Agreement Template for Malaysia

A Pre-Financing Agreement under Malaysian law is a formal contract that establishes the preliminary terms and conditions for a financing arrangement between a lender and borrower. The document outlines the proposed financing structure, conditions precedent, disbursement terms, and key obligations of all parties involved. It serves as a foundational document that ensures compliance with Malaysian financial regulations, including the Financial Services Act 2013 and relevant Bank Negara Malaysia guidelines, while protecting the interests of both the financing institution and the recipient of funds.

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What is a Pre Financing Agreement?

The Pre-Financing Agreement is a crucial document used in Malaysian financing transactions to establish the framework for subsequent financing arrangements. It is typically employed when parties have agreed in principle to a financing arrangement but need to formalize the preliminary terms and conditions before proceeding with the main facility agreement. The document addresses key aspects such as the proposed financing amount, purpose, conditions precedent, and basic terms of disbursement, while ensuring compliance with Malaysian banking and financial services regulations. This agreement serves as a bridge between initial negotiations and the final financing documentation, providing legal certainty and clarity for all parties involved while maintaining flexibility for the final terms to be refined.

What sections should be included in a Pre Financing Agreement?

1. Parties: Identification of the financing party and the recipient, including full legal names and registration details

2. Background: Recitals explaining the purpose of the financing and the parties' intentions

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

4. Financing Amount and Purpose: Specifies the amount of financing and its intended use

5. Conditions Precedent: Prerequisites that must be satisfied before the financing becomes available

6. Disbursement Terms: Procedures and conditions for disbursement of the financing amount

7. Interest and Fees: Details of interest rates, calculation methods, and any applicable fees

8. Repayment Terms: Schedule and method of repayment, including prepayment provisions

9. Representations and Warranties: Standard declarations about the parties' legal status and capacity

10. Covenants: Ongoing obligations of the parties during the financing period

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

12. Termination: Conditions and procedures for terminating the agreement

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

14. Notices: Communication procedures between parties

15. General Provisions: Standard boilerplate clauses including assignment, amendments, and severability

What sections are optional to include in a Pre Financing Agreement?

1. Security Arrangements: Required when the financing is secured by collateral or guarantees

2. Corporate Guarantees: Included when a corporate entity provides guarantees for the financing

3. Insurance Requirements: Needed when specific insurance coverage is required for the financing

4. Special Purpose Vehicle Provisions: Required when financing involves an SPV structure

5. Currency and Exchange Rate Provisions: Included for cross-border financing arrangements

6. Shareholder Undertakings: Required when shareholders need to provide specific commitments

7. Regulatory Compliance: Additional provisions for regulated industries or specific regulatory requirements

What schedules should be included in a Pre Financing Agreement?

1. Schedule 1 - Financing Terms: Detailed breakdown of financing amount, interest rates, and payment schedule

2. Schedule 2 - Conditions Precedent Documents: List of required documents and conditions to be satisfied

3. Schedule 3 - Disbursement Schedule: Timeline and conditions for disbursement of funds

4. Schedule 4 - Form of Drawdown Notice: Template for requesting disbursement of funds

5. Schedule 5 - Security Documents: List and copies of security documents, if applicable

6. Schedule 6 - Compliance Certificates: Templates for ongoing compliance certification

7. Appendix A - Required Authorizations: List of necessary regulatory and corporate authorizations

8. Appendix B - Form of Financial Covenants Compliance Certificate: Template for reporting financial covenant compliance

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

Financing Agreement

Cost

Free to use

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