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Guarantee Facility Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Guarantee Facility Agreement

"I need a Guarantee Facility Agreement for a Saudi construction company requiring a SAR 50 million facility from a local bank to cover performance bonds and advance payment guarantees for government infrastructure projects, with the facility to commence in March 2025."

Document background
The Guarantee Facility Agreement is essential for businesses operating in Saudi Arabia that require regular access to bank guarantees for their operations. This document establishes a master facility under which multiple guarantees can be issued over time, streamlining the process for both the bank and the customer. It is particularly crucial for companies involved in government contracts, construction projects, or international trade where guarantees are frequently required. The agreement must comply with Saudi Arabian law, including both civil law requirements and Sharia principles, making it unique compared to conventional guarantee facilities in other jurisdictions. The document typically includes comprehensive provisions for the issuance process, fees (structured in a Sharia-compliant manner), obligations of parties, and enforcement mechanisms, all while ensuring compliance with SAMA regulations and Islamic banking requirements.
Suggested Sections

1. Parties: Identification of the guarantor, beneficiary, and any other relevant parties

2. Background: Context of the guarantee facility and relationship between parties

3. Definitions and Interpretation: Key terms used in the agreement and rules of interpretation

4. Facility Details: Nature, amount, and purpose of the guarantee facility

5. Islamic Finance Compliance: Declarations and provisions ensuring Sharia compliance

6. Conditions Precedent: Requirements to be met before the facility becomes effective

7. Issuance of Guarantees: Process and requirements for issuing individual guarantees under the facility

8. Fees and Charges: Applicable fees, commission and charges (structured in compliance with Sharia)

9. Representations and Warranties: Statements of fact and assurances given by the parties

10. Covenants: Ongoing obligations of the parties during the facility period

11. Events of Default: Circumstances constituting default and consequences

12. Indemnities: Indemnification obligations of the parties

13. Payments: Payment mechanisms and procedures

14. Term and Termination: Duration of the facility and termination provisions

15. Governing Law and Jurisdiction: Application of Saudi law and jurisdiction of Saudi courts

Optional Sections

1. Security: Required when the facility is secured by additional collateral or assets

2. Counter-Indemnity: Used when there are multiple parties providing back-to-back guarantees

3. Currency Provisions: Included for facilities involving multiple currencies

4. Assignment and Transfer: Required when transfer rights need to be specifically addressed

5. Anti-Money Laundering: Detailed AML provisions when required by regulatory requirements

6. Multiple Guarantor Provisions: Required when there are multiple guarantors

7. Agency Provisions: Included when an agent is appointed to manage the facility

8. Electronic Banking Provisions: Required when electronic banking services are part of the facility

Suggested Schedules

1. Form of Guarantee Request: Template for requesting issuance of guarantees under the facility

2. Form of Guarantee: Standard format for guarantees to be issued under the facility

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

4. Conditions Precedent Documents: List of required documents and conditions to be satisfied

5. Authorized Signatories: List of persons authorized to request guarantees and execute documents

6. Existing Guarantees: Details of any existing guarantees to be brought under the facility

7. Compliance Documents: Required Sharia compliance certificates and approvals

8. Form of Reports: Templates for any required periodic reporting

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

Relevant legal definitions




















































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Relevant Industries

Banking and Financial Services

Construction and Infrastructure

International Trade

Manufacturing

Oil and Gas

Real Estate Development

Government Contractors

Telecommunications

Defense

Healthcare

Education

Retail

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Banking

Trade Finance

Credit

Islamic Banking

Project Finance

Commercial

Operations

Relevant Roles

Chief Financial Officer

Treasury Manager

Legal Counsel

Compliance Officer

Risk Manager

Corporate Banking Manager

Trade Finance Manager

Credit Manager

Relationship Manager

Project Finance Manager

Islamic Banking Specialist

Contract Administrator

Finance Director

Company Secretary

Commercial Director

Industries








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