The Subordinated Promissory Note is a crucial financing instrument in South African corporate and financial markets, commonly used when companies or individuals need to create tiered debt structures. This document is particularly relevant in scenarios where new debt needs to be subordinated to existing obligations, such as in corporate restructurings, expansion financing, or shareholder loans. The note must comply with South African law, particularly the Bills of Exchange Act and Companies Act, and typically includes specific provisions about the debt amount, interest rates, payment terms, and importantly, the subordination mechanics that determine its ranking relative to other debt obligations. It's essential for documenting debt obligations while protecting senior creditors' rights and establishing clear payment hierarchies.
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1. Parties: Identification of the Maker (Promisor) and Payee (Promisee) with full legal names and details
2. Background: Context of the debt obligation and subordination arrangement
3. Definitions: Key terms used in the note, including 'Senior Debt', 'Subordinated Debt', and payment-related terms
4. Promise to Pay: Unconditional promise to pay the principal amount, including the specific sum and currency
5. Interest: Interest rate, calculation method, and payment frequency
6. Subordination Terms: Terms of subordination to senior debt, including ranking and payment restrictions
7. Payment Terms: Payment schedule, method, and place of payment
8. Events of Default: Circumstances constituting default and consequences
9. Governing Law: Specification of South African law as governing law
10. Signature: Execution block with date and signature requirements
1. Security: Details of any security or collateral provided - include if the note is secured
2. Transferability: Terms regarding whether and how the note can be transferred or assigned - include if transfers are to be permitted
3. Tax Provisions: Treatment of taxes and withholding - include if tax implications need to be addressed
4. Senior Creditor Rights: Specific rights of senior creditors - include if required by senior lenders
5. Acceleration: Circumstances allowing acceleration of payment - include if early payment provisions are needed
6. Representations and Warranties: Maker's representations about financial condition - include for complex commercial transactions
1. Payment Schedule: Detailed schedule of payment dates and amounts if installment payments are involved
2. Senior Debt Schedule: List of existing senior debt obligations to which this note is subordinated
3. Security Details: Details of any security or collateral if the note is secured
4. Calculation of Interest: Detailed methodology for interest calculation if complex interest provisions apply
Relevant legal definitions
Acceleration Event
Business Day
Default Interest Rate
Default Notice
Enforcement Action
Event of Default
Interest Payment Date
Interest Period
Interest Rate
Maker
Maturity Date
Outstanding Amount
Payee
Payment Date
Permitted Payment
Principal Amount
Redemption Date
Senior Creditors
Senior Debt
Senior Finance Documents
Subordinated Debt
Subordination Period
Taxes
Transfer
Business Day
Default Interest Rate
Default Notice
Enforcement Action
Event of Default
Interest Payment Date
Interest Period
Interest Rate
Maker
Maturity Date
Outstanding Amount
Payee
Payment Date
Permitted Payment
Principal Amount
Redemption Date
Senior Creditors
Senior Debt
Senior Finance Documents
Subordinated Debt
Subordination Period
Taxes
Transfer
Clauses
Relevant Industries
Financial Services
Banking
Investment Management
Private Equity
Corporate Finance
Real Estate
Manufacturing
Mining
Technology
Telecommunications
Healthcare
Retail
Relevant Teams
Legal
Finance
Treasury
Corporate Finance
Risk Management
Compliance
Credit
Executive Management
Company Secretariat
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Corporate Lawyer
Legal Counsel
Investment Manager
Credit Manager
Financial Controller
Debt Manager
Risk Manager
Company Secretary
Managing Director
Finance Manager
Compliance Officer
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