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Secured Letter Of Credit for Malaysia

Secured Letter Of Credit Template for Malaysia

A Secured Letter of Credit under Malaysian law is a specialized financial instrument that combines the traditional letter of credit mechanism with additional security arrangements. It provides enhanced protection for the issuing bank by requiring the applicant to pledge specific assets or collateral against the letter of credit facility. The document is governed by Malaysian law, particularly the Financial Services Act 2013 and relevant banking regulations, while also incorporating international standards such as the UCP 600. This instrument is commonly used in high-value international trade transactions where the issuing bank requires additional security beyond the standard documentary requirements.

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Secured Letter Of Credit

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What is a Secured Letter Of Credit?

A Secured Letter of Credit is utilized when standard documentary credit arrangements need to be supplemented with additional security measures. This document type is particularly relevant in situations where the issuing bank requires collateral support from the applicant, either due to the transaction size, applicant's credit standing, or regulatory requirements. The security component typically involves pledges of assets, cash deposits, or other forms of collateral. Under Malaysian jurisdiction, these instruments must comply with both local banking regulations and international trade practices. The document details the credit terms, security arrangements, document requirements, and enforcement mechanisms, providing a comprehensive framework for secured trade finance transactions. The security features make this type of Letter of Credit particularly attractive for high-value transactions or when dealing with new trading relationships where additional risk mitigation is desired.

What sections should be included in a Secured Letter Of Credit?

1. Letter Details and Date: Identifying information including reference number, date, and type of credit

2. Parties: Full legal names and addresses of the issuing bank, applicant (buyer), and beneficiary (seller)

3. Credit Amount and Currency: Specification of the credit amount, currency, and any tolerance levels

4. Form of Credit: Specification that this is a secured, irrevocable letter of credit

5. Security Details: Description of the security arrangement, including type of security, amount, and terms

6. Availability and Expiry: Terms of when and how the credit is available, expiry date and place

7. Payment Terms: Specification of payment terms, including timing and method of payment

8. Required Documents: Detailed list of documents required for presentation

9. Shipping Terms: Specifications for shipment, latest shipment date, and partial shipments if applicable

10. Bank Charges: Allocation of banking charges between parties

11. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction

12. UCP 600 Declaration: Statement that the credit is subject to UCP 600

What sections are optional to include in a Secured Letter Of Credit?

1. Revolving Terms: Required when the letter of credit is revolving, specifying reinstatement terms

2. Back-to-Back Arrangements: Needed when the LC is part of a back-to-back LC structure

3. Red Clause Provisions: Include when advance payment provisions are required

4. Transferability: Required when the credit needs to be transferable to other beneficiaries

5. Additional Security Arrangements: When multiple forms of security or complex security arrangements are involved

6. Special Instructions: For any transaction-specific requirements or conditions

7. Foreign Exchange Provisions: Required when currency conversion or special forex arrangements are needed

What schedules should be included in a Secured Letter Of Credit?

1. Schedule 1 - Security Details: Detailed description of security arrangements, including asset details, valuation, and maintenance requirements

2. Schedule 2 - Document Requirements: Detailed specifications for required documents including format and content requirements

3. Schedule 3 - Goods Description: Detailed description of the goods or services covered by the LC

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

5. Appendix A - Security Documents: Copies or forms of security documents to be executed

6. Appendix B - Standard Presentation Forms: Standard forms for document presentation

7. Appendix C - Bank's Standard Terms: Bank's standard terms and conditions for secured LCs

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

Letter of Credit

Cost

Free to use
Relevant legal definitions





























Clauses

























Relevant Industries

Banking and Financial Services

International Trade

Manufacturing

Import/Export

Commodity Trading

Shipping and Logistics

Agriculture

Mining and Resources

Construction

Wholesale and Distribution

Relevant Teams

Legal

Trade Finance

Credit Risk

Corporate Banking

Compliance

Treasury

International Trade Operations

Documentation

Security and Collateral Management

Transaction Banking

Relevant Roles

Trade Finance Manager

Credit Risk Officer

Corporate Banking Manager

International Trade Specialist

Legal Counsel

Compliance Officer

Security Documentation Specialist

Treasury Manager

Chief Financial Officer

Import/Export Manager

Documentary Credits Specialist

Banking Relationship Manager

Risk Management Director

Trade Operations 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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