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Guarantee Facility Agreement for Malaysia

Guarantee Facility Agreement Template for Malaysia

A comprehensive legal document governed by Malaysian law that establishes a guarantee facility whereby one party (the Guarantor) agrees to secure the obligations of another party (the Principal Debtor) to a financial institution. The agreement is structured in accordance with Malaysian banking regulations, the Contracts Act 1950, and relevant financial services legislation, incorporating specific provisions for enforcement under Malaysian jurisdiction. It details the scope of the guarantee, limitations of liability, conditions for demand, and enforcement mechanisms while ensuring compliance with local statutory requirements and banking practices.

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Guarantee Facility Agreement

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What is a Guarantee Facility Agreement?

The Guarantee Facility Agreement is a crucial financial instrument in Malaysian banking and commerce, used when a third party (Guarantor) provides additional security for a borrower's obligations to a lender. This document is essential in situations where the principal debtor's creditworthiness needs to be enhanced or where additional security is required by the lender as a condition for providing financing. The agreement, governed by Malaysian law and regulated under the Financial Services Act 2013 and Contracts Act 1950, outlines the guarantor's obligations, enforcement mechanisms, and the specific conditions under which the guarantee can be called upon. It is particularly important in corporate financing, property development, and large-scale commercial transactions where substantial credit facilities are required. The document must comply with Malaysian banking regulations and incorporate specific requirements for guarantee agreements under local law, including proper stamping under the Stamp Act 1949 for enforceability.

What sections should be included in a Guarantee Facility Agreement?

1. Parties: Identification of the Guarantor, Principal Debtor, and Beneficiary (typically a financial institution)

2. Background: Context of the guarantee facility, including reference to the principal facility agreement

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

4. Guarantee and Indemnity: Core guarantee obligations, including scope and nature of the guarantee

5. Limit of Liability: Maximum amount of the guarantor's liability and any limitations

6. Continuing Security: Provisions establishing the guarantee as a continuing obligation

7. Representations and Warranties: Guarantor's representations regarding capacity, authority, and financial condition

8. Covenants: Ongoing obligations of the guarantor during the facility period

9. Events of Default: Circumstances constituting default and consequences

10. Payments and Interest: Payment obligations, including interest on demanded amounts

11. Costs and Expenses: Allocation of costs related to the facility and enforcement

12. Notices: Communication procedures between parties

13. Assignment and Transfer: Rights and restrictions regarding transfer of rights under the guarantee

14. Governing Law and Jurisdiction: Specification of Malaysian law and jurisdiction provisions

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

1. Security Provisions: Required when the guarantee is secured against specific assets

2. Corporate Guarantor Provisions: Additional provisions when the guarantor is a corporation

3. Multiple Guarantors: Provisions for joint and several liability when there are multiple guarantors

4. Currency Provisions: Required for facilities involving multiple currencies

5. Islamic Banking Provisions: Required when the facility needs to comply with Shariah principles

6. Counter-Indemnity: Optional provisions for guarantor's right to be indemnified by the principal debtor

7. Priority Arrangements: Required when there are multiple security or guarantee arrangements

8. Set-off Rights: Optional provisions for set-off against guarantor's accounts with the beneficiary

What schedules should be included in a Guarantee Facility Agreement?

1. Facility Particulars: Details of the guaranteed facility including amount, purpose, and term

2. Form of Demand: Prescribed form for making demands under the guarantee

3. Conditions Precedent: List of documents and conditions required before facility effectiveness

4. Security Details: Description of any security assets and perfection requirements

5. Secured Obligations: Detailed list of obligations covered by the guarantee

6. Fee Schedule: Details of guarantee fees, commissions, and other charges

7. Existing Security Interests: List of existing encumbrances on security assets if applicable

8. Required Authorizations: List of regulatory and corporate approvals required

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

Real Estate and Property Development

Construction

Manufacturing

Trading and Commerce

Infrastructure Development

Energy and Utilities

Telecommunications

Healthcare

Education

Relevant Teams

Legal

Finance

Risk Management

Compliance

Corporate Banking

Credit Administration

Treasury

Operations

Corporate Secretarial

Credit Risk

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Secretary

Risk Manager

Credit Risk Officer

Relationship Manager

Compliance Officer

Banking Operations Manager

Treasury Manager

Corporate Banking Manager

Legal Director

Credit Analysis Manager

Security Documentation Officer

Financial Controller

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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