Negative Pledge Agreement Template for Singapore

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Key Requirements PROMPT example:

Negative Pledge Agreement

"Need a Negative Pledge Agreement for a Singapore-based manufacturing company taking out a $5M unsecured loan, with specific carve-outs for equipment leasing and trade finance arrangements to be permitted under the agreement."

Document background
The Negative Pledge Agreement is a crucial credit protection instrument in Singapore's lending landscape. It is typically used alongside primary facility agreements to enhance a creditor's position by preventing the borrower from granting competing security interests to other parties. The document addresses key aspects such as permitted exceptions, monitoring mechanisms, and enforcement rights, all within Singapore's legal framework. This type of agreement is particularly valuable in unsecured lending arrangements where the lender seeks indirect protection of the borrower's asset base without taking direct security.
Suggested Sections

1. Parties: Identification of the pledgor and the beneficiary/creditor

2. Background: Context of the agreement, including reference to primary facility or loan agreement

3. Definitions: Key terms including 'Security Interest', 'Permitted Security', 'Secured Obligations'

4. Negative Pledge Undertaking: Core covenant not to create or permit security interests over assets

5. Permitted Security: Exceptions to the negative pledge covenant

6. Duration: Term of the agreement and conditions for termination

7. Remedies: Rights and remedies in case of breach

8. Governing Law and Jurisdiction: Choice of Singapore law and jurisdiction

Optional Sections

1. Representations and Warranties: Pledgor's statements about existing security interests and when additional comfort is needed about existing arrangements

2. Information Undertakings: Obligations to provide information about assets and security, particularly for complex asset structures or higher-risk transactions

3. Further Assurance: Obligation to execute additional documents if needed, used when future actions might be required to perfect the arrangement

4. Assignment and Transfer: Rights to assign or transfer rights under the agreement, used when the beneficiary might want to transfer rights

Suggested Schedules

1. Schedule of Existing Security Interests: List of pre-existing security interests that are carved out

2. Schedule of Secured Assets: Description of assets subject to the negative pledge

3. Schedule of Permitted Security: Detailed list of permitted exceptions to the negative pledge

4. Form of Compliance Certificate: Template for periodic confirmation of compliance

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

Industries

Companies Act (Cap. 50): Primary legislation governing corporate entities in Singapore, particularly Section 131 regarding registration of charges and security interests

Securities and Futures Act (Cap. 289): Regulates securities and financial instruments, relevant for any pledges involving securities or financial assets

Property Law Act (Cap. 242): Governs property rights and interests in Singapore, relevant for pledges involving real property

Insolvency, Restructuring and Dissolution Act 2018: Regulates insolvency proceedings and creditor rights, crucial for understanding the effectiveness of negative pledges in insolvency scenarios

Contract Act (Cap. 53): Fundamental legislation governing contract formation, validity, and enforcement in Singapore

MAS Guidelines: Regulatory guidelines from the Monetary Authority of Singapore applicable to regulated entities involved in negative pledge agreements

SGX Listing Rules: Requirements and obligations for listed companies entering into negative pledge agreements

Common Law Principles: Singapore's common law principles regarding contractual obligations, remedies, and enforcement of negative pledges

Cross-border Recognition Rules: Legal framework for recognition and enforcement of negative pledge agreements with international elements

Security Interest Registration Requirements: Rules and procedures for registering security interests and charges under Singapore law

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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