Loss Share Agreement Template for Hong Kong

The Loss Share Agreement is a crucial document used when parties wish to allocate and share potential losses arising from specific assets, portfolios, or business activities. This agreement type is commonly utilized in Hong Kong's financial sector, particularly in situations involving asset transfers, portfolio acquisitions, joint ventures, or risk-sharing arrangements between financial institutions. The document is structured to comply with Hong Kong's legal and regulatory framework, including requirements under the Securities and Futures Ordinance and Banking Ordinance. It typically includes detailed provisions for loss calculation methodologies, payment mechanisms, reporting requirements, and dispute resolution procedures. The agreement is particularly relevant in scenarios where parties seek to mitigate risks associated with uncertain asset values or potential future losses, providing a clear framework for loss allocation and risk sharing.

1. Parties: Identification of all parties to the agreement

2. Background: Context of the agreement and relationship between the parties

3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation

4. Scope of Loss Sharing: Definition of covered losses and scope of the loss-sharing arrangement

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

6. Loss Share Percentages: Specified percentages or proportions of losses to be borne by each party

7. Payment Mechanics: Procedures and timing for loss share payments between parties

8. Reporting Requirements: Required loss reports, documentation, and reporting frequencies

9. Verification Rights: Rights to verify and audit loss calculations and supporting documentation

10. Representations and Warranties: Standard and specific representations made by each party

11. Covenants: Ongoing obligations of the parties

12. Events of Default: Circumstances constituting default and consequences

13. Termination: Termination events and procedures

14. Dispute Resolution: Procedures for resolving disputes between parties

15. Confidentiality: Obligations regarding confidential information

16. Governing Law and Jurisdiction: Applicable law and jurisdiction for disputes

17. Miscellaneous: Standard boilerplate provisions including notices, amendments, and assignment