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Letter Of Credit Facility Agreement

Letter Of Credit Facility Agreement Template for South Africa

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Key Requirements PROMPT example:

Letter Of Credit Facility Agreement

"Need a Letter of Credit Facility Agreement for our manufacturing company with Standard Bank South Africa, for a facility limit of R50 million, primarily for importing machinery from Germany, with security being provided through a corporate guarantee and cash deposit."

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Document background
The Letter of Credit Facility Agreement is a crucial document in international trade finance, particularly within the South African context where it must comply with local banking and foreign exchange regulations. This agreement is typically used when a business requires regular access to letter of credit facilities for international trade transactions, establishing a pre-approved facility rather than negotiating terms for each individual letter of credit. The document outlines the relationship between the bank and the applicant, including facility limits, security arrangements, fees, and compliance requirements under South African law. It incorporates provisions from key legislation such as the Banks Act, Currency and Exchanges Act, and Financial Intelligence Centre Act, ensuring proper regulatory compliance while facilitating international trade transactions.
Suggested Sections

1. Parties: Identification of the bank/financial institution and the customer/applicant

2. Background: Context of the facility arrangement and purpose of the agreement

3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and rules of interpretation

4. The Facility: Details of the letter of credit facility including type, amount, and purpose

5. Conditions Precedent: Prerequisites that must be satisfied before the facility becomes available

6. Utilization: Procedures and requirements for using the facility

7. Fees and Charges: All applicable fees, commissions, and charges related to the facility

8. Security: Security arrangements required for the facility

9. Representations and Warranties: Standard declarations made by the customer about their legal and financial status

10. Undertakings: Ongoing obligations of the customer throughout the facility period

11. Events of Default: Circumstances that constitute default and their consequences

12. Bank's Rights and Remedies: Actions the bank can take in various circumstances, including default

13. Payments and Calculations: Payment terms, methods, and calculation principles

14. General Provisions: Standard legal provisions including notices, amendments, and governing law

Optional Sections

1. Multiple Currency Provisions: Additional terms for facilities involving multiple currencies

2. Syndication Provisions: Terms governing participation of multiple banks in the facility

3. Islamic Banking Provisions: Specific terms for Shariah-compliant letter of credit facilities

4. Counter-Indemnity: Additional indemnity provisions for specific high-risk transactions

5. Transfer and Assignment: Terms governing the transfer of rights under the facility

6. Environmental and Social Requirements: Special conditions for environmentally or socially sensitive transactions

7. Digital Platform Terms: Terms for electronic submission and processing of letters of credit

Suggested Schedules

1. Facility Terms Schedule: Detailed commercial terms including limits, pricing, and validity period

2. Form of Utilization Request: Standard form for requesting issuance of letters of credit

3. Security Documents: List and copies of all security documents

4. Fee Schedule: Detailed breakdown of all applicable fees and charges

5. Conditions Precedent Documents: List of required documents and evidence

6. Authorized Signatories: List of persons authorized to act on behalf of the customer

7. Standard Forms: Collection of standard forms for various facility-related requests and notices

8. Compliance Requirements: Detailed regulatory and compliance requirements

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
Clauses
Facility Terms
Conditions Precedent
Utilization
Security
Representations and Warranties
Covenants
Events of Default
Remedies
Payment
Interest
Fees and Expenses
Tax
Change in Circumstances
Currency
Indemnity
Set-off
Assignment and Transfer
Confidentiality
Notices
Amendments
Force Majeure
Severability
Waiver
Counterparts
Governing Law
Jurisdiction
Dispute Resolution
Compliance
Anti-Money Laundering
Foreign Exchange Control
Documentation
Authority
Term and Termination
Entire Agreement
Further Assurance
Relevant Industries

Banking & Financial Services

International Trade

Import/Export

Manufacturing

Retail

Wholesale

Commodities Trading

Agriculture

Mining

Construction

Logistics & Transportation

Relevant Teams

Legal

Finance

Treasury

Trade Finance

Compliance

Risk Management

Procurement

Supply Chain

Credit Control

Company Secretariat

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Trade Finance Manager

Import/Export Manager

Financial Controller

Legal Counsel

Compliance Officer

Risk Manager

Banking Relationship Manager

Commercial Director

Supply Chain Manager

Procurement Manager

Credit Manager

Company Secretary

Industries
Banks Act 94 of 1990: Primary legislation governing banking institutions in South Africa, setting out requirements for banking operations and financial services
National Credit Act 34 of 2005: Regulates credit agreements and consumer credit, including requirements for credit facilities and consumer protection measures
Financial Intelligence Centre Act 38 of 2001: Establishes requirements for customer due diligence and anti-money laundering measures in financial transactions
Currency and Exchanges Act 9 of 1933: Regulates foreign exchange transactions and cross-border financial dealings, crucial for international letters of credit
Financial Advisory and Intermediary Services Act 37 of 2002: Regulates the provision of financial advisory and intermediary services to clients
Consumer Protection Act 68 of 2008: Provides general consumer protection provisions that may apply to financial services agreements
Electronic Communications and Transactions Act 25 of 2002: Relevant for electronic banking services and digital documentation related to the letter of credit facility
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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