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Surety Backed Letter Of Credit for Malaysia

Surety Backed Letter Of Credit Template for Malaysia

A comprehensive financial instrument template governed by Malaysian law that combines the security of a traditional Letter of Credit with additional surety backing. This document establishes the terms and conditions for the issuance of a Letter of Credit that is supported by a surety provider, offering enhanced security to the beneficiary. It incorporates provisions compliant with Malaysian banking regulations, particularly the Financial Services Act 2013, while adhering to international banking practices including UCP 600. The document details the roles, responsibilities, and obligations of all parties involved, including the issuing bank, applicant, beneficiary, and surety provider, along with specific conditions for drawing, payment terms, and enforcement mechanisms.

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Surety Backed Letter Of Credit

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What is a Surety Backed Letter Of Credit?

This document template is designed for transactions requiring enhanced security in financial commitments under Malaysian jurisdiction. A Surety Backed Letter of Credit is particularly valuable in high-value commercial transactions where traditional Letters of Credit need additional support. It is commonly used in international trade, large-scale construction projects, and major supply contracts where the beneficiary requires extra assurance of payment. The document incorporates requirements from Malaysian banking regulations, including the Financial Services Act 2013 and Central Bank guidelines, while also adhering to international banking standards such as UCP 600. It is structured to provide comprehensive coverage of all aspects of the arrangement, from initial issuance to potential enforcement, including detailed provisions for the surety's obligations and the conditions under which they become operative.

What sections should be included in a Surety Backed Letter Of Credit?

1. Parties: Identification of all parties: Applicant, Beneficiary, Issuing Bank, and Surety Provider

2. Background: Context of the transaction, relationship between parties, and purpose of the surety-backed LC

3. Definitions: Definitions of key terms used throughout the document, including banking, trade, and surety-specific terminology

4. Letter of Credit Terms: Core terms of the LC including amount, validity period, and conditions for drawing

5. Surety Terms and Conditions: Terms of the surety backing, including extent of coverage and conditions for surety's obligation

6. Drawing Requirements: Specific documents and conditions required for drawing under the LC

7. Payment Terms: Terms and process for payment, including currency, method, and timing

8. Bank's Rights and Obligations: Detailed outline of the issuing bank's responsibilities and rights

9. Surety's Rights and Obligations: Detailed outline of the surety provider's responsibilities and rights

10. Applicant's Undertakings: Commitments and obligations of the LC applicant

11. Default and Remedy: Events of default and consequent remedies available to each party

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

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

1. Counter-Indemnity: Terms of counter-indemnity provided by the applicant to the surety, included when specifically required

2. Transfer and Assignment: Provisions for transfer or assignment of LC rights, included if transferability is permitted

3. Electronic Presentation: Terms for electronic document presentation, included if eUCP rules are adopted

4. Multiple Drawing Provisions: Specific terms for multiple drawings, included if multiple drawings are permitted

5. Syndication Provisions: Terms for bank syndication, included if multiple banks are involved

6. Force Majeure: Provisions for unforeseen circumstances, included based on risk assessment

7. Anti-Money Laundering Compliance: Specific AML compliance requirements, included based on transaction risk profile

What schedules should be included in a Surety Backed Letter Of Credit?

1. Schedule 1 - Form of Demand: Prescribed format for making a demand under the LC

2. Schedule 2 - Required Documents: Detailed list of documents required for LC drawing

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

4. Schedule 4 - Form of Surety Bond: Standard form of the surety bond backing the LC

5. Schedule 5 - Communication Procedures: Procedures for communications between parties

6. Appendix A - Specimen Signatures: Authorized signatures for all relevant parties

7. Appendix B - Bank's Standard Terms: Standard terms and conditions of the issuing bank

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

Construction

Manufacturing

Energy and Utilities

Infrastructure Development

Shipping and Logistics

Real Estate Development

Mining and Resources

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Risk Management

International Trade

Compliance

Corporate Banking

Trade Finance

Credit

Operations

Relevant Roles

Chief Financial Officer

Treasury Manager

Trade Finance Manager

Risk Management Officer

Corporate Banking Officer

Finance Director

Legal Counsel

Commercial Director

Credit Risk Manager

International Trade Specialist

Compliance Officer

Banking Operations Manager

Documentary Credits Manager

Corporate Finance Manager

Senior Contract 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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