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Cash Collateral Letter Of Credit Template for Hong Kong

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Key Requirements PROMPT example:

Cash Collateral Letter Of Credit

"I need a Cash Collateral Letter of Credit for our Hong Kong manufacturing company to secure a USD 2 million purchase of machinery from a German supplier, with 100% cash collateral in HKD to be maintained throughout the validity period until March 2025."

Document background
This document is essential for international trade transactions where a bank issues a letter of credit secured by cash collateral. A Cash Collateral Letter of Credit is commonly used when the applicant needs to provide additional security to the issuing bank, typically in situations where the applicant's creditworthiness requires enhancement or when regulatory requirements necessitate cash backing. The document, governed by Hong Kong law, integrates local banking regulations with international standards like UCP 600, making it particularly suitable for transactions involving Hong Kong-based banks or entities. It's frequently used in import/export transactions, large procurement contracts, and international business dealings where the beneficiary requires a secure payment instrument backed by cash collateral.
Suggested Sections

1. Date and Parties: Date of issuance, issuing bank details, applicant details, and beneficiary details

2. Letter of Credit Number: Unique reference number for the L/C

3. Amount and Currency: Maximum value of the L/C and currency denomination

4. Cash Collateral Details: Amount of cash collateral, currency, and deposit requirements

5. Collateral Ratio: Required ratio of collateral to L/C value

6. Expiry Date: Validity period of the L/C

7. Available With/By: Terms of availability and method of payment

8. Beneficiary Claims Process: Procedure for making claims under the L/C

9. Required Documents: List of documents required for claims

10. Bank's Rights and Security Interest: Bank's rights over the cash collateral

11. Governing Law and Jurisdiction: Specification of Hong Kong law and jurisdiction

Optional Sections

1. Partial Drawings: Include when multiple partial drawings are permitted under the L/C

2. Transferability: Include when the L/C can be transferred to other beneficiaries

3. Interest on Collateral: Include if interest is payable on the cash collateral

4. Auto-renewal Clause: Include for L/Cs that can be automatically renewed

5. Foreign Exchange Provisions: Include when collateral and L/C currencies differ

6. Additional Security: Include when additional forms of security are required besides cash

7. Force Majeure: Include specific force majeure provisions beyond standard UCP 600 terms

Suggested Schedules

1. Schedule 1 - Form of Demand: Standard format for making claims under the L/C

2. Schedule 2 - Required Documents: Detailed list and specifications of required documents for claims

3. Schedule 3 - Fee Schedule: Detailed breakdown of all applicable fees and charges

4. Schedule 4 - Collateral Payment Instructions: Bank account details and procedures for depositing collateral

5. Appendix A - UCP 600 Incorporation: Specific UCP 600 articles incorporated by reference

6. Appendix B - Authorized Signatories: List of authorized signatories for the applicant and their specimen signatures

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions


































Clauses




























Relevant Industries

Banking and Financial Services

International Trade

Manufacturing

Import/Export

Retail

Wholesale

Construction

Energy

Commodities

Shipping and Logistics

Agriculture

Technology

Relevant Teams

Legal

Finance

Treasury

International Trade

Risk Management

Compliance

Trade Operations

Credit

Commercial Banking

Documentary Credits

Relevant Roles

Trade Finance Manager

Chief Financial Officer

Treasury Manager

Finance Director

Import/Export Manager

Credit Risk Officer

Banking Relationship Manager

Trade Operations Manager

Compliance Officer

Legal Counsel

Documentary Credits Specialist

Commercial Banking Officer

Senior Trade Finance Executive

International Business Development 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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