The Drawdown Bank Guarantee is a crucial financial instrument in South African commercial transactions where staged or flexible payment security is required. It is commonly used in construction projects, trade finance, and large commercial contracts where the beneficiary needs the ability to draw down portions of the guaranteed amount over time. This type of guarantee differs from standard bank guarantees by incorporating specific mechanisms for partial drawings, typically including detailed procedures for drawdown notices, verification processes, and reduction of the guarantee amount following each drawing. The document must comply with South African banking regulations and financial sector laws, including the Banks Act 94 of 1990 and the Financial Sector Regulation Act 9 of 2017. It is particularly valuable in scenarios where project milestones, periodic payments, or variable financial security requirements necessitate a flexible guarantee structure.
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1. Parties: Identification of the Bank (Guarantor), the Beneficiary, and the Applicant (Principal Debtor)
2. Background: Context of the guarantee, reference to underlying relationship or facility
3. Definitions: Key terms used in the guarantee including 'Guaranteed Amount', 'Expiry Date', 'Drawdown Notice'
4. Guarantee: Core guarantee provisions, maximum amount, and bank's undertaking
5. Drawdown Mechanism: Specific procedures and requirements for making drawdowns under the guarantee
6. Conditions for Demand: Requirements that must be met for a valid demand under the guarantee
7. Payment Terms: Timeframe and method for payment upon valid demand
8. Reduction and Expiry: Provisions for reduction of guarantee amount and circumstances of expiry
9. Bank's Rights and Obligations: Scope of bank's responsibilities and rights under the guarantee
10. Notices: Format and procedure for all communications under the guarantee
11. Governing Law and Jurisdiction: Confirmation of South African law and jurisdiction
1. Currency Provisions: Required when guarantee involves foreign currency or multiple currencies
2. Counter-Indemnity: Include when separate counter-indemnity from applicant is incorporated into main guarantee document
3. Transfer and Assignment: Include when transfer of guarantee rights is permitted
4. Multiple Banking Parties: Required when multiple banks are involved as guarantors
5. Anti-Money Laundering Compliance: Include when specific AML requirements need to be highlighted
6. Electronic Presentation: Include when electronic submission of demands is permitted
7. Force Majeure: Include when specific force majeure provisions are required for the guarantee
1. Form of Drawdown Notice: Template for beneficiary to make drawdown requests
2. Underlying Facility Details: Summary or extract of the underlying facility or relationship
3. Demand Requirements Checklist: Detailed list of requirements for valid demand
4. Authorized Signatories: List of persons authorized to sign drawdown notices
5. Fee Schedule: Details of any fees payable in connection with the guarantee
6. Communication Details: Contact information and communication protocols for all parties
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Relevant Industries
Banking and Financial Services
Construction and Infrastructure
International Trade
Mining and Resources
Real Estate Development
Manufacturing
Energy and Utilities
Telecommunications
Retail and Commercial
Government and Public Sector
Relevant Teams
Legal
Finance
Treasury
Compliance
Risk Management
Commercial Operations
Project Management
Credit Control
Trade Finance
Corporate Secretariat
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Commercial Director
Project Finance Manager
Legal Counsel
Compliance Officer
Risk Manager
Contract Manager
Banking Relationship Manager
Project Manager
Financial Controller
Company Secretary
Credit Manager
Trade Finance Manager
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