Guarantee Facility Agreement for South Africa

Guarantee Facility Agreement Template for South Africa

A comprehensive legal agreement governed by South African law that establishes the terms and conditions under which a financial institution agrees to issue guarantees on behalf of a borrower/applicant. The agreement details the facility limit, issuance procedures, fees, security arrangements, and obligations of all parties involved. It incorporates requirements under South African banking regulations, financial services legislation, and commercial law, ensuring compliance with local regulatory requirements while facilitating business operations requiring bank guarantees.

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What is a Guarantee Facility Agreement?

The Guarantee Facility Agreement is a crucial financial instrument in South African commercial practice, commonly used when businesses require bank guarantees for various commercial purposes such as bid bonds, performance bonds, or advance payment guarantees. This agreement establishes the framework under which a financial institution will issue guarantees up to an agreed limit, detailing the rights and obligations of all parties involved. The document must comply with South African banking regulations, particularly the Banks Act and Financial Sector Regulation Act, while incorporating necessary commercial protections. It's essential for businesses engaging in contracts requiring performance guarantees, participating in tenders, or requiring financial assurance for commercial transactions. The agreement typically includes comprehensive terms regarding facility utilization, security requirements, fees, and enforcement mechanisms.

What sections should be included in a Guarantee Facility Agreement?

1. Parties: Identification of the facility provider, the borrower/applicant, and any guarantors

2. Background: Context of the facility arrangement and relationship between the parties

3. Definitions and Interpretation: Detailed definitions of terms used in the agreement and interpretation rules

4. The Facility: Nature, amount, and purpose of the guarantee facility

5. Conditions Precedent: Requirements to be satisfied before the facility becomes available

6. Issue of Guarantees: Process and requirements for issuing guarantees under the facility

7. Fees and Costs: Facility fees, commission, and other charges payable

8. Payments: Payment terms, methods, and currency provisions

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

10. Undertakings: Positive and negative obligations of the borrower/applicant

11. Events of Default: Circumstances constituting default and consequences

12. Indemnities: Protection of the facility provider against losses and claims

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

14. Notices: Communication requirements and contact details

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

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

1. Security: Include when additional security is required beyond the standard indemnity

2. Counter-Indemnity: Include when there are multiple guarantors or specific indemnity arrangements

3. Currency Provisions: Include for facilities involving multiple currencies or foreign currency guarantees

4. Multiple Borrowers/Applicants: Include when the facility is provided to multiple entities

5. Increased Costs: Include when regulatory changes might affect the cost of maintaining the facility

6. Tax Gross-Up and Indemnities: Include when tax implications need specific attention

7. Bank Accounts: Include when specific account arrangements are required for the facility

8. Anti-Money Laundering Provisions: Include when enhanced AML compliance is required

What schedules should be included in a Guarantee Facility Agreement?

1. Form of Request for Guarantee: Standard form for requesting issuance of guarantees under the facility

2. Form of Guarantee: Template(s) for guarantees to be issued under the facility

3. Conditions Precedent Documents: List of required documents and conditions to be satisfied

4. Fee Schedule: Detailed breakdown of all applicable fees and charges

5. Designated Account Details: Banking details for payments under the facility

6. Compliance Documents: Forms and certificates for ongoing compliance requirements

7. Security Documents: Forms of security documents if additional security is required

8. Contact Details: Detailed contact information for all parties and authorized representatives

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

South Africa

Publisher

Genie AI

Document Type

Financing Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking and Financial Services

Construction and Infrastructure

Mining and Resources

Real Estate Development

International Trade

Manufacturing

Government and Public Sector

Retail and Commercial

Energy and Utilities

Telecommunications

Transportation and Logistics

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Commercial Operations

Credit

Corporate Affairs

Business Development

Project Management

Procurement

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Lawyer

Commercial Director

Risk Manager

Compliance Officer

Banking Relationship Manager

Credit Manager

Contract Manager

Company Secretary

Financial Controller

Business Development Director

Project Finance 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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