Loan Participation Agreement Template for Denmark

The Loan Participation Agreement is a critical document used in financial transactions where an original lender wishes to transfer economic exposure to a loan while maintaining the direct relationship with the borrower. This arrangement is particularly common in Denmark's sophisticated financial market, where banks and financial institutions actively manage their loan portfolios and risk exposure. The document serves multiple purposes: it enables the original lender to share risk and potentially free up regulatory capital, while providing participants with access to loan assets without direct borrower relationships. The agreement must comply with Danish financial regulations and EU directives, particularly regarding capital requirements, risk transfer, and financial services. It typically includes detailed provisions on payment mechanics, risk allocation, information rights, and regulatory compliance, making it essential for various financing structures including bilateral loans, syndicated facilities, and project finance transactions.

1. Parties: Identification of the original lender and participant(s), including registration numbers and addresses

2. Background: Context of the underlying loan and the purpose of the participation arrangement

3. Definitions and Interpretation: Definitions of key terms and interpretation rules, including references to the underlying loan agreement

4. Participation: Core provisions defining the nature and extent of the participation, including participation percentage and effective date

5. Purchase Price and Payment: Terms regarding the purchase price for the participation, payment mechanics, and settlement details

6. Risk Participation: Allocation of risks between the original lender and participant, including credit risk and market risk

7. Information Rights: Participant's rights to receive information about the underlying loan and borrower

8. Payments and Distributions: Mechanics for sharing payments received under the underlying loan and the timing of distributions

9. Representations and Warranties: Standard representations and warranties from both parties

10. Administration of the Underlying Loan: Rights and obligations regarding loan administration, including voting rights and amendment procedures

11. Regulatory Compliance: Provisions ensuring compliance with relevant Danish and EU regulations

12. Confidentiality: Confidentiality obligations and permitted disclosures, including GDPR compliance

13. Termination: Events triggering termination and the consequences of termination

14. Notices: Communication procedures between parties

15. Governing Law and Jurisdiction: Confirmation of Danish law as governing law and jurisdiction for disputes