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Financial Lease Contract for Malaysia

Financial Lease Contract Template for Malaysia

A comprehensive legal agreement governed by Malaysian law that establishes a financial leasing arrangement between a lessor (typically a financial institution) and a lessee. The document structures a financing transaction where the lessee gains use of an asset while making periodic payments, with the lessor retaining ownership throughout the lease term. The agreement incorporates provisions compliant with the Malaysian Financial Services Act 2013 and, where applicable, the Islamic Financial Services Act 2013, addressing key aspects such as payment terms, maintenance obligations, insurance requirements, and end-of-term arrangements.

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Financial Lease Contract

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What is a Financial Lease Contract?

The Financial Lease Contract serves as a crucial financing instrument in the Malaysian market, enabling businesses and individuals to acquire the use of valuable assets without immediate full payment. This document type combines elements of both financing and leasing, structured in compliance with Malaysian financial services regulations. It is particularly useful when entities seek to obtain assets while maintaining optimal cash flow and potentially benefiting from tax advantages. The agreement includes detailed provisions on asset usage, maintenance responsibilities, payment schedules, and end-of-lease options, while ensuring compliance with both conventional and Islamic finance principles where applicable. The document must align with the Financial Services Act 2013 and related Malaysian legislation, making it suitable for various commercial and industrial applications.

What sections should be included in a Financial Lease Contract?

1. Parties: Identification of the Lessor and Lessee with full legal names and registration/identification details

2. Background: Context of the lease arrangement and brief description of the transaction

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

4. Agreement to Lease: Core leasing obligations and confirmation of the lease arrangement

5. Term of Lease: Duration of the lease, including commencement and expiry dates

6. Rental Payments: Payment terms, amounts, frequency, and method of payment

7. Delivery and Acceptance: Terms regarding the delivery and acceptance of the leased asset

8. Title and Ownership: Confirmation of lessor's ownership and lessee's rights of possession

9. Use and Maintenance: Obligations regarding the use, maintenance, and care of the leased asset

10. Insurance: Insurance requirements and responsibilities

11. Representations and Warranties: Key representations and warranties by both parties

12. Events of Default: Definition of default events and consequences

13. Termination: Termination rights and procedures

14. Indemnification: Mutual indemnification provisions

15. Notices: Process for giving notices under the agreement

16. Governing Law and Jurisdiction: Confirmation of Malaysian law as governing law and jurisdiction

What sections are optional to include in a Financial Lease Contract?

1. Islamic Finance Compliance: Required when the lease is structured as an Islamic finance transaction (Ijarah)

2. Purchase Option: Include when the lessee has an option to purchase the asset at the end of the lease term

3. Security Deposit: Required when a security deposit is part of the arrangement

4. Guarantees: Include when there is a third-party guarantor for the lessee's obligations

5. Assignment and Subletting: Include when assignment or subletting rights are to be explicitly addressed

6. Tax Provisions: Detailed tax provisions when complex tax arrangements apply

7. Force Majeure: Detailed force majeure provisions when required for specific industries or circumstances

8. Environmental Compliance: Required for leases of assets with environmental implications

What schedules should be included in a Financial Lease Contract?

1. Schedule 1 - Asset Description: Detailed description of the leased asset including specifications and condition

2. Schedule 2 - Payment Schedule: Detailed breakdown of all rental payments, dates, and amounts

3. Schedule 3 - Delivery and Acceptance Protocol: Form of delivery and acceptance certificate

4. Schedule 4 - Insurance Requirements: Detailed insurance requirements and specifications

5. Schedule 5 - Maintenance Requirements: Detailed maintenance and servicing requirements

6. Schedule 6 - Return Conditions: Specifications for the condition of the asset upon return

7. Appendix A - Form of Purchase Option Notice: Template for exercising purchase option if applicable

8. Appendix B - Guarantee Agreement: Form of guarantee agreement if applicable

Authors

Alex Denne

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

Jurisdiction

Malaysia

Document Type

Financing Agreement

Cost

Free to use
Relevant legal definitions





























Clauses




























Relevant Industries

Banking and Financial Services

Manufacturing

Transportation and Logistics

Construction

Agriculture

Technology and IT

Healthcare

Real Estate

Energy and Utilities

Mining and Resources

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Risk Management

Operations

Procurement

Compliance

Credit

Islamic Banking

Asset Management

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Contract Manager

Treasury Manager

Risk Manager

Financial Controller

Asset Manager

Operations Director

Procurement Manager

Compliance Officer

Islamic Finance Specialist

Credit Manager

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, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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