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Loan Participation Agreement
"I need a Loan Participation Agreement for a PKR 500 million corporate loan where my bank will sell a 40% participation to another Pakistani bank, with the underlying loan being Sharia-compliant and maturing in March 2025."
1. Parties: Identifies the lead bank/seller and participant/buyer, including their registration details and addresses
2. Background: Describes the underlying loan agreement and the intention to sell a participation interest
3. Definitions: Defines key terms used throughout the agreement, including Participation Interest, Underlying Loan, Borrower, etc.
4. Sale and Purchase of Participation: Details the participation interest being sold, purchase price, and closing mechanics
5. Payments and Distributions: Mechanisms for sharing payments received from the borrower and distribution waterfall
6. Rights and Obligations of the Parties: Outlines respective rights and duties of the lead bank and participant
7. Information Rights: Lead bank's obligations to share information about the underlying loan and borrower
8. Standard of Care: Lead bank's duties in administering the underlying loan
9. Representations and Warranties: Key assurances from both parties regarding capacity, authority, and loan status
10. Fees and Expenses: Administration fees and cost allocation between parties
11. Tax Matters: Treatment of taxes and withholding requirements
12. Termination: Circumstances and process for terminating the participation
13. Governing Law and Jurisdiction: Specifies Pakistani law as governing law and jurisdiction for disputes
14. Notices: Process for formal communications between parties
15. Miscellaneous: Standard boilerplate provisions including amendments, assignments, and severability
1. Sharia Compliance: Required if the participation needs to be Sharia-compliant, detailing specific Islamic finance requirements
2. Regulatory Compliance: Additional section if either party is subject to specific regulatory requirements beyond standard banking regulations
3. Foreign Exchange Provisions: Required if the participation involves cross-border elements or foreign currency
4. Voting Rights: Detailed section on participant's voting rights if participation includes decision-making powers
5. Risk Participation: Additional provisions if the agreement includes risk participation features
6. Sub-Participation: Required if sub-participation is allowed, detailing conditions and requirements
7. Elevation Rights: Optional provisions for converting participation into direct loan assignment
1. Schedule 1 - Underlying Loan Details: Key information about the underlying loan including borrower, amount, term, and key conditions
2. Schedule 2 - Participation Details: Specific details of the participation including percentage, purchase price, and any special conditions
3. Schedule 3 - Form of Transfer Certificate: Standard form for documenting the transfer of the participation interest
4. Schedule 4 - Administrative Details: Contact information and bank account details for both parties
5. Schedule 5 - Form of Notices: Standard forms for various notices required under the agreement
6. Appendix A - Required Regulatory Approvals: List of necessary regulatory approvals and compliance requirements
7. Appendix B - Payment Calculations: Detailed methodology for calculating payments and distributions
8. Appendix C - Reporting Requirements: Templates and timing for required reporting between parties
Authors
Applicable Law
Borrower
Business Day
Closing Date
Default
Event of Default
Facility Agreement
Finance Documents
Financial Indebtedness
Governmental Authority
Interest Period
Lead Bank
Loan Agreement
Material Adverse Effect
Participant
Participation
Participation Interest
Participation Percentage
Payment Date
Principal Amount
Purchase Price
Regulatory Requirements
Relevant Jurisdiction
Required Approvals
Security
Security Documents
Selling Bank
State Bank of Pakistan
Tax
Transfer Certificate
Transfer Date
Underlying Loan
Unpaid Sum
Voting Rights
Payment and Distribution
Conditions Precedent
Representations and Warranties
Covenants
Information Rights
Administration
Fees and Expenses
Tax Gross-up and Indemnities
Increased Costs
Set-off
Assignment and Transfer
Amendments and Waivers
Confidentiality
Notices
Calculations and Certificates
Partial Invalidity
Remedies and Waivers
Governing Law
Dispute Resolution
Force Majeure
Termination
Regulatory Compliance
Anti-Money Laundering
Voting Rights
Risk Participation
Default Provisions
Standard of Care
Sub-Participation Rights
Elevation Rights
Security Arrangements
Stamp Duty
Registration Requirements
Foreign Exchange Compliance
Banking
Financial Services
Investment Management
Corporate Finance
Project Finance
Infrastructure
Real Estate
Manufacturing
Energy
Telecommunications
Mining
Agriculture
Healthcare
Legal
Finance
Credit Risk
Compliance
Treasury
Loan Administration
Syndications
Banking Operations
Investment Management
Portfolio Management
Transaction Management
Risk Assessment
Documentation
Chief Financial Officer
Head of Legal
Finance Director
Credit Risk Manager
Loan Officer
Syndication Manager
Treasury Manager
Compliance Officer
Banking Relationship Manager
Investment Manager
Legal Counsel
Transaction Manager
Portfolio Manager
Risk Assessment Officer
Banking Operations Manager
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