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Collateral Release Letter

Collateral Release Letter Template for Malaysia

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Key Requirements PROMPT example:

Collateral Release Letter

"I need a Collateral Release Letter for ABC Manufacturing Sdn Bhd, who has fully repaid their term loan of RM 5 million on January 15, 2025, to release the machinery and equipment held as security by Malaysia Bank Berhad."

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Document background
A Collateral Release Letter is a crucial document in Malaysian banking and finance practice, used when a lender or security holder needs to formally relinquish their security interests in collateral. This document becomes necessary when a loan has been fully repaid, during refinancing, or when replacing existing security arrangements. The letter must comply with Malaysian banking regulations and relevant legislation, including the Financial Services Act 2013 and Contracts Act 1950. It typically includes specific details about the original security arrangement, the collateral being released, and any conditions attached to the release. The document serves as conclusive evidence that the security holder no longer claims any rights over the specified collateral and authorizes the removal or discharge of any registered security interests.
Suggested Sections

1. Letter Header: Contains sender's details, date, recipient's details, and reference numbers

2. Subject Line: Clear identification of the document as a Collateral Release Letter with reference to the original security agreement

3. Opening Statement: Reference to the original facility/loan agreement and security arrangements

4. Collateral Description: Clear identification of the collateral being released

5. Release Declaration: Formal statement releasing all claims and rights to the collateral

6. Effective Date: Specification of when the release takes effect

7. Return of Documents: Statement regarding the return of any original security documents

8. Authorization: Confirmation of authority to release the collateral

9. Closing: Standard letter closing with signature blocks for authorized signatories

Optional Sections

1. Conditions Precedent: Include when the release is subject to certain conditions being met first

2. Partial Release Statement: Required when only part of the collateral is being released

3. Surviving Obligations: Include when certain obligations or terms survive the release

4. Governing Law Statement: Include when dealing with cross-border transactions or when specifically required

5. Registration Requirements: Include when the release needs to be registered with authorities

Suggested Schedules

1. Schedule A - Collateral Details: Detailed description of the collateral being released, including any identifying numbers or registration details

2. Schedule B - Original Security Documents: List of all security documents being discharged or returned

3. Schedule C - Related Facilities: List of related facility agreements or loan documents, if applicable

4. Appendix 1 - Supporting Documents: Copies of relevant supporting documents such as board resolutions or power of attorney

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 Industries

Banking and Financial Services

Real Estate

Manufacturing

Trading and Commerce

Construction

Oil and Gas

Agriculture

Technology

Healthcare

Infrastructure

Relevant Teams

Legal

Finance

Treasury

Credit Administration

Risk Management

Compliance

Corporate Secretarial

Loan Operations

Security Administration

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Banking Officer

Credit Manager

Security Trustee Officer

Compliance Officer

Risk Manager

Treasury Manager

Loan Officer

Company Secretary

Finance Manager

Legal Manager

Industries
Contracts Act 1950: The primary legislation governing contract formation, validity, and enforcement in Malaysia, essential for ensuring the release letter meets basic contractual requirements.
Financial Services Act 2013: Regulates financial institutions and banking activities in Malaysia, including matters related to security interests and their release.
Companies Act 2016: Relevant for corporate entities involved in the collateral arrangement, particularly regarding company charges and their release.
Stamp Act 1949: Governs the stamp duty requirements for legal documents in Malaysia, including release letters and related instruments.
National Land Code 1965: Important when the collateral involves real property, governing the registration and release of charges on land.
Securities Commission Act 1993: Relevant when the collateral involves securities or other regulated financial instruments.
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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