Loan Participation Agreement Generator for United Arab Emirates

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Loan Participation Agreement Template

I need a Loan Participation Agreement Template for a UAE-based conventional bank acting as lead lender, with three international bank participants, for a AED 500 million syndicated facility with Islamic finance provisions and sub-participation rights.

Document background

The Loan Participation Agreement Template is designed for use in the United Arab Emirates banking sector when financial institutions wish to participate in loan facilities without creating direct contractual relationships with the borrower. This document template is structured to comply with UAE Federal Law No. 14 of 2018 (Central Bank Law) and related banking regulations, while incorporating international best practices in loan participation arrangements. It covers essential aspects including participation mechanics, risk sharing, payment distributions, and administrative procedures, with specific provisions addressing UAE regulatory requirements and market practices. The template is adaptable for both conventional and Islamic banking structures, making it suitable for various types of loan facilities in the UAE market. This document typically serves as the foundation for negotiating and documenting loan participation arrangements between UAE-licensed financial institutions and international participants operating in the UAE market.

Suggested Sections

1. Parties: Identification of the lead lender and participant(s), including their respective licensing and regulatory status

2. Background: Context of the underlying loan, the lead lender's role, and the purpose of the participation arrangement

3. Definitions and Interpretation: Key terms used throughout the agreement and rules for interpreting the document

4. Sale and Purchase of Participation: Core terms of the participation purchase, including participation percentage and purchase price

5. Payments and Distributions: Mechanisms for sharing payments received from the borrower and the waterfall of distribution

6. Rights and Obligations of the Lead Lender: Lead lender's duties, standard of care, and authority in managing the underlying loan

7. Rights and Obligations of the Participant: Participant's rights to receive information and payments, and limitations on direct action against the borrower

8. Representations and Warranties: Statements of fact and assurances from both parties regarding their capacity and authority

9. Administration of the Underlying Loan: Procedures for loan management, including modifications, enforcement actions, and voting rights

10. Fees and Expenses: All fees payable to the lead lender and allocation of costs

11. Confidentiality: Obligations regarding the treatment of confidential information

12. Term and Termination: Duration of the agreement and circumstances allowing early termination

13. Governing Law and Jurisdiction: UAE law as governing law and jurisdiction for disputes

14. Notices: Communication procedures and contact details for formal notices

15. General Provisions: Standard boilerplate provisions including amendments, assignments, and severability

Optional Sections

1. Risk Participation: Used when the participation includes sharing of credit risk, defining the extent of risk sharing and related procedures

2. Regulatory Requirements: Added when specific regulatory compliance obligations need to be addressed, such as capital adequacy requirements

3. Sub-Participation: Include when sub-participation rights are to be granted or restricted

4. Security Interest: Required when the participant is to receive a security interest in the underlying loan documentation

5. Sharia Compliance: Include for Islamic banking participants or when the underlying loan is Sharia-compliant

6. Elevated Rights: Used when the participant is granted rights beyond those of a typical participant, such as direct enforcement rights

7. Multiple Currency Provisions: Include when the participation involves multiple currencies

8. Tax Provisions: Detailed tax provisions when cross-border elements create specific tax implications

Suggested Schedules

1. Schedule 1 - Underlying Loan Details: Details of the underlying loan agreement including key terms, conditions, and payment schedule

2. Schedule 2 - Participation Details: Specific details of the participation including percentage, purchase price, and any special terms

3. Schedule 3 - Form of Transfer Certificate: Standard form for documenting transfers of participation interests

4. Schedule 4 - Administrative Details: Contact information, account details, and operational procedures

5. Schedule 5 - Fee Schedule: Detailed breakdown of all applicable fees and payment terms

6. Appendix A - Calculation Methodology: Detailed methodology for calculating participations in payments and losses

7. Appendix B - Reporting Requirements: Templates and procedures for regular reporting between parties

8. Appendix C - Compliance Requirements: Specific UAE regulatory compliance requirements and procedures

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Banking

Financial Services

Investment Banking

Commercial Banking

Islamic Banking

Corporate Finance

Project Finance

Real Estate Finance

Infrastructure Finance

Trade Finance

Relevant Teams

Legal

Credit

Risk Management

Compliance

Treasury

Syndications

Portfolio Management

Islamic Banking

Documentation

Finance

Operations

Relevant Roles

Chief Credit Officer

Head of Syndications

Loan Portfolio Manager

Senior Legal Counsel

Compliance Officer

Risk Manager

Transaction Manager

Investment Officer

Credit Analysis Manager

Treasury Manager

Relationship Manager

Head of Banking

Chief Risk Officer

Documentation Manager

Islamic Banking Officer

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Authors

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