Indirect Bank Guarantee Template for Malaysia

The Indirect Bank Guarantee is a crucial financial instrument in international trade and cross-border transactions under Malaysian law. It is typically used when a foreign party needs to provide a guarantee to a Malaysian beneficiary, but the beneficiary prefers or requires a guarantee from a local Malaysian bank. The guarantor bank in Malaysia issues the guarantee based on a counter-guarantee from the foreign bank (counter-guarantor bank), creating a chain of obligations. This document is essential for various commercial purposes including bid bonds, performance guarantees, and advance payment guarantees. The structure complies with Bank Negara Malaysia guidelines and the Financial Services Act 2013, while incorporating international banking practices and URDG 758 principles where applicable.

1. Parties: Identifies all parties involved: the guarantor bank, the counter-guarantor bank, and the beneficiary

2. Background: Sets out the context of the guarantee, including the underlying transaction and the relationship between the parties

3. Definitions: Defines key terms used throughout the guarantee document

4. Guarantee Amount and Scope: Specifies the maximum guarantee amount and the precise scope of the guarantee

5. Duration and Validity: States the effective date, expiry date, and any auto-extension conditions

6. Demand Requirements: Details the process and requirements for making a valid demand under the guarantee

7. Payment Terms: Specifies payment conditions, timeline, and currency

8. Counter-Indemnity: Outlines the counter-guarantor bank's obligations to indemnify the guarantor bank

9. Bank's Rights and Obligations: Details the rights and obligations of both the guarantor and counter-guarantor banks

10. Governing Law and Jurisdiction: Specifies Malaysian law as the governing law and establishes jurisdiction