Loss Share Agreement Template for England and Wales

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Key Requirements PROMPT example:

Loss Share Agreement

"Need a Loss Share Agreement between our bank and a hedge fund partner to share potential losses on a £50M commercial property loan portfolio, with an 80:20 loss sharing ratio and monthly reporting requirements starting from March 2025."

Document background
Loss Share Agreements are commonly used in financial transactions where parties wish to distribute risk exposure. These agreements, governed by English and Welsh law, are particularly valuable in portfolio acquisitions, loan participations, and risk management structures. A Loss Share Agreement typically details the scope of covered losses, calculation methodologies, payment mechanisms, and reporting requirements. They are especially relevant in the current economic climate where risk sharing has become increasingly important for financial stability and regulatory compliance.
Suggested Sections

1. Parties: Identification and details of the contracting parties

2. Background: Context and purpose of the loss share arrangement

3. Definitions: Key terms used throughout the agreement

4. Loss Share Mechanism: Core provisions detailing how losses will be shared

5. Calculation and Payment: Methods for calculating losses and payment procedures

6. Representations and Warranties: Standard assurances from both parties

7. Term and Termination: Duration and termination provisions

Optional Sections

1. Security Arrangements: Additional security provisions when collateral or security is part of the arrangement

2. Regulatory Compliance: Specific regulatory obligations when parties are regulated entities

3. Data Protection: Data handling and protection provisions when personal data is being shared

Suggested Schedules

1. Loss Calculation Methodology: Detailed methodology for calculating shared losses

2. Form of Loss Notice: Template for notifying losses under the agreement

3. Payment Procedures: Detailed payment mechanisms and timelines

4. Eligible Assets: List of assets covered by the loss share arrangement

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

Relevant legal definitions
Clauses
Industries

Financial Services and Markets Act 2000: Primary legislation governing financial services in the UK, covering regulated financial activities, authorization requirements, and regulatory framework

Companies Act 2006: Key legislation covering corporate capacity, authority, and directors' duties and responsibilities in UK company law

Law of Property Act 1925: Fundamental legislation governing property law and contractual relationships in England and Wales

Misrepresentation Act 1967: Legislation dealing with false or misleading statements made during contract formation

Unfair Contract Terms Act 1977: Controls the use of exclusion and limitation clauses in contracts

FCA Regulations: Financial Conduct Authority regulations including Conduct of Business Sourcebook (COBS) and Systems and Controls (SYSC)

PRA Requirements: Prudential Regulation Authority requirements covering capital adequacy and risk management standards

Basel III: International regulatory framework for banks, setting standards for capital adequacy and market liquidity

Insurance Act 2015: Key legislation governing insurance contracts and related matters in the UK

Consumer Credit Act 1974: Legislation regulating consumer credit agreements and consumer protection in financial services

Data Protection Act 2018: UK's implementation of data protection standards, working alongside UK GDPR for data sharing provisions

UK Competition Law: Legal framework ensuring fair competition and preventing anti-competitive practices

Insolvency Act 1986: Legislation governing insolvency proceedings and default scenarios in the UK

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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