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Subsidiary Loan Agreement

Subsidiary Loan Agreement Template for Hong Kong

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Key Requirements PROMPT example:

Subsidiary Loan Agreement

"I need a Subsidiary Loan Agreement governed by Hong Kong law for a HKD 50 million secured loan from our parent company to our Hong Kong manufacturing subsidiary, with quarterly repayments starting March 2025."

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Document background
The Subsidiary Loan Agreement is a crucial document for corporate groups operating in Hong Kong, used to formalize and regulate lending arrangements between group companies. This agreement type is particularly important for multinational corporations and Hong Kong-based groups managing internal capital flows and implementing group treasury strategies. The document must comply with Hong Kong's legal framework, particularly the Companies Ordinance and Banking Ordinance, while addressing practical aspects of intra-group financing. A Subsidiary Loan Agreement typically includes detailed provisions on loan facilities, interest calculations, repayment terms, financial covenants, and reporting requirements, tailored to the group's specific needs and structure. It's essential for maintaining clear financial relationships within corporate groups and ensuring proper documentation for regulatory, audit, and tax purposes.
Suggested Sections

1. Parties: Identifies the lender (parent/group company) and borrower (subsidiary) with full legal names and registration details

2. Background: Sets out the context of the intra-group lending arrangement and its purpose within the group structure

3. Definitions and Interpretation: Defines key terms used in the agreement, including group-specific terminology and financial definitions

4. The Facility: Details of the loan amount, purpose, and any conditions precedent to drawdown

5. Interest: Interest rate provisions, calculation methods, and payment dates

6. Repayment and Prepayment: Terms for loan repayment, prepayment rights and conditions

7. Representations and Warranties: Subsidiary's representations about its status, capacity, and financial condition

8. Information Undertakings: Requirements for financial and operational information provision to the parent/group

9. General Undertakings: Borrower's operational and financial covenants

10. Events of Default: Circumstances constituting default and consequences

11. Changes to Parties: Provisions regarding assignment and transfer rights

12. Administration: Practical provisions about notices, calculations, and payments

13. Governing Law and Jurisdiction: Specifies Hong Kong law as governing law and jurisdiction for disputes

Optional Sections

1. Security: Include when the loan is to be secured by subsidiary's assets

2. Subordination: Required if the loan needs to be subordinated to other group or external financing

3. Tax Gross-Up and Indemnities: Include if cross-border elements exist or specific tax arrangements need to be addressed

4. Group Treasury Arrangements: Include if loan is part of broader group cash management system

5. Currency Provisions: Required if loan involves multiple currencies or foreign exchange considerations

6. Guarantee: Include if additional group companies are providing guarantees

7. Set-off Rights: Include if specific set-off arrangements between group companies are needed

Suggested Schedules

1. Form of Drawdown Request: Standard form for subsidiary to request loan disbursements

2. Conditions Precedent: List of required documents and conditions to be satisfied before drawdown

3. Repayment Schedule: If installment repayments, detailed schedule of payment dates and amounts

4. Financial Covenants Calculations: Detailed methods for calculating any financial covenants

5. Security Documents: If secured, forms of security documents or security details

6. Group Structure Chart: Shows relationship between lender and borrower within group structure

7. Form of Compliance Certificate: Template for periodic compliance certification by borrower

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Affiliate
Agreement
Availability Period
Business Day
Commitment
Compliance Certificate
Default
Default Interest
Drawdown Date
Drawdown Request
Event of Default
Facility
Finance Documents
Financial Indebtedness
Financial Year
Group
HIBOR
HKD
Hong Kong
Interest Payment Date
Interest Period
Interest Rate
Lender
Loan
Material Adverse Effect
Maturity Date
Party/Parties
Permitted Security
Potential Event of Default
Prepayment Amount
Principal Amount
Repayment Date
Repayment Schedule
Security
Security Documents
Subsidiary
Tax
Transaction Documents
Utilization
Working Day
Clauses
Interpretation
Facility Terms
Purpose
Conditions Precedent
Drawdown
Interest
Repayment
Prepayment
Tax Gross-up
Increased Costs
Representations and Warranties
Information Undertakings
Financial Covenants
General Undertakings
Events of Default
Security
Set-off
Assignment and Transfer
Changes to Parties
Payment Mechanics
Notices
Calculations
Amendments and Waivers
Confidentiality
Counterparts
Severability
Force Majeure
Anti-corruption
Subordination
Currency Provisions
Costs and Expenses
Indemnities
Governing Law
Dispute Resolution
Relevant Industries

Financial Services

Manufacturing

Real Estate

Retail

Technology

Infrastructure

Energy

Healthcare

Telecommunications

Construction

Trading

Professional Services

Relevant Teams

Legal

Finance

Treasury

Corporate Finance

Company Secretarial

Tax

Compliance

Risk Management

Internal Audit

Financial Control

Relevant Roles

Chief Financial Officer

Group Treasurer

Financial Controller

Legal Counsel

Company Secretary

Finance Director

Treasury Manager

Group Financial Controller

Corporate Finance Manager

Legal Director

Compliance Officer

Financial Reporting Manager

Tax Director

Audit Manager

Risk Manager

Industries
Companies Ordinance (Cap. 622): Primary legislation governing company operations in Hong Kong, including corporate capacity to borrow and create security, registration requirements for charges, and corporate authority matters
Money Lenders Ordinance (Cap. 163): Regulates money lending transactions and licensing requirements, though typically with exemptions for authorized institutions and intra-group lending
Banking Ordinance (Cap. 155): Regulates banking activities and financial institutions in Hong Kong, relevant for lender's regulatory compliance
Contract and Rights of Third Parties Ordinance (Cap. 623): Governs the enforcement of contractual rights by third parties, relevant for assignment and transfer provisions
Stamp Duty Ordinance (Cap. 117): Governs stamp duty requirements on certain documents, including loan security documents involving Hong Kong property
Securities and Futures Ordinance (Cap. 571): Relevant if the loan involves any securities as collateral or if there are any capital markets elements
Law Amendment and Reform (Consolidation) Ordinance (Cap. 23): Contains provisions regarding contractual formalities and evidence, relevant for documentation requirements
Conveyancing and Property Ordinance (Cap. 219): Relevant if the loan agreement involves real property as security or contains real property covenants
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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