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Subordinated Promissory Note for Singapore

Subordinated Promissory Note Template for Singapore

A Subordinated Promissory Note under Singapore law is a debt instrument that documents a promise to pay a specified sum of money, where the debt ranks junior to other specified obligations of the issuer. The document is governed by Singapore law and incorporates specific provisions required under the Banking Act and MAS guidelines when used by financial institutions. It includes detailed terms regarding interest, repayment, subordination mechanics, and events of default.

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Subordinated Promissory Note

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What is a Subordinated Promissory Note?

A Subordinated Promissory Note is commonly used in Singapore when companies or financial institutions need to raise capital while maintaining existing senior debt arrangements. The document explicitly subordinates the debt to other specified obligations, making it particularly useful for regulatory capital purposes in financial institutions or in structured financing arrangements. Under Singapore law, these notes must comply with specific regulatory requirements, especially when issued by banks or financial institutions. The note typically includes detailed provisions on payment terms, interest calculations, subordination mechanics, and default scenarios.

What sections should be included in a Subordinated Promissory Note?

1. Parties: Identifies the issuer and holder of the note

2. Background: Context of the note issuance and relationship between parties

3. Definitions: Key terms used throughout the note

4. Promise to Pay: Core obligation to repay principal amount with specified interest

5. Subordination Provisions: Terms defining the subordinated nature of the debt and ranking in relation to other creditors

6. Interest Rate and Calculation: Details of interest rate, calculation methodology and payment periods

7. Payment Terms: Schedule and method of payments, including prepayment provisions

8. Events of Default: Circumstances constituting default and consequences thereof

9. Governing Law and Jurisdiction: Specification of Singapore law as governing law and jurisdiction

What sections are optional to include in a Subordinated Promissory Note?

1. Security: Details of any collateral arrangements or security interests when note is secured by assets

2. Transferability: Terms governing transfer or assignment of the note when intended to be transferable

3. Tax Provisions: Treatment of taxes on payments and withholding requirements

4. Representations and Warranties: Additional assurances and statements by the issuer regarding their capacity and authority

What schedules should be included in a Subordinated Promissory Note?

1. Payment Schedule: Detailed repayment schedule including principal and interest payment dates

2. Interest Calculation Examples: Illustrative examples of interest calculations and methodologies

3. Form of Transfer Certificate: Standard form for documenting transfers of the note if transferable

4. Subordination Terms: Detailed terms of subordination including ranking of creditors and payment restrictions

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

Singapore

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions

























Clauses
























Industries

Contracts Act (Cap. 53): Primary legislation governing contract formation, validity, and enforcement in Singapore. Essential for basic promissory note structure and enforceability.

Securities and Futures Act (Cap. 289): Regulates securities and financial instruments. Relevant for determining if the note qualifies as a security and associated compliance requirements.

Companies Act (Cap. 50): Governs corporate entities and their ability to issue debt instruments. Important for corporate issuers of subordinated notes.

Civil Law Act (Cap. 43): Contains provisions relevant to civil obligations and remedies, including those related to debt instruments.

Banking Act (Cap. 19): Regulates banking institutions and their ability to issue subordinated debt. Critical if the note involves regulated financial institutions.

MAS Guidelines on Subordinated Debt: Monetary Authority of Singapore's specific guidelines governing subordinated debt instruments, particularly relevant for financial institutions.

Notice 637 on Risk Based Capital Adequacy Requirements: MAS notice detailing capital requirements and treatment of subordinated debt for banks.

Moneylenders Act (Cap. 188): Regulates money lending activities in Singapore. Relevant for ensuring the note structure doesn't inadvertently breach moneylending regulations.

Stamp Duties Act (Cap. 312): Governs stamp duty obligations on financial instruments, including promissory notes.

Bankruptcy Act (Cap. 20): Critical for subordination provisions and understanding creditor rights in case of issuer insolvency.

Teams

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