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Undertaking Loan Agreement Template for Hong Kong

A comprehensive legal document governed by Hong Kong law that establishes the terms and conditions of a loan facility between a lender and borrower. The agreement details the loan amount, interest rates, repayment terms, security arrangements (if any), representations and warranties, covenants, events of default, and enforcement mechanisms. It incorporates specific requirements under Hong Kong's financial regulations, including compliance with the Money Lenders Ordinance and other relevant legislation, while providing a robust framework for the lending relationship and protecting both parties' interests.

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What is a Undertaking Loan Agreement?

The Undertaking Loan Agreement is a essential financial instrument used in Hong Kong's lending landscape when one party (the lender) agrees to provide financial accommodation to another party (the borrower). This document is particularly crucial in commercial lending transactions, structured under Hong Kong law and compliant with local regulatory requirements including the Money Lenders Ordinance and Banking Ordinance. It serves multiple purposes: documenting the loan terms, protecting both parties' interests, establishing security arrangements where applicable, and providing enforcement mechanisms. The agreement is commonly used in both corporate and individual lending scenarios, ranging from simple bilateral loans to complex syndicated facilities. The document includes detailed provisions on loan disbursement, interest calculations, repayment schedules, events of default, and remedies, all tailored to comply with Hong Kong's legal framework.

What sections should be included in a Undertaking Loan Agreement?

1. Parties: Identification of the lender and borrower with full legal names and addresses

2. Background: Context of the loan arrangement and relationship between parties

3. Definitions: Definitions of key terms used throughout the agreement

4. Loan Amount and Purpose: Specification of the loan amount and permitted use of funds

5. Interest: Interest rate, calculation method, and payment terms

6. Repayment Terms: Schedule of repayments, payment methods, and prepayment provisions

7. Conditions Precedent: Conditions that must be satisfied before the loan is advanced

8. Representations and Warranties: Statements of fact and assurances given by the borrower

9. Covenants: Ongoing obligations of the borrower during the loan term

10. Events of Default: Circumstances constituting default and consequences

11. Enforcement: Rights and remedies of the lender upon default

12. General Provisions: Standard clauses including notices, amendments, governing law, etc.

What sections are optional to include in a Undertaking Loan Agreement?

1. Security: Details of any collateral or security arrangements - include when loan is secured

2. Guarantees: Terms of any guarantees - include when there are guarantors

3. Insurance: Insurance requirements for secured assets - include for secured loans

4. Assignment: Rights to assign or transfer the loan - include for transferable loans

5. Financial Covenants: Specific financial requirements - include for corporate borrowers

6. Joint and Several Liability: Multiple borrower provisions - include when there are multiple borrowers

7. Cross-Default: Links to other financial obligations - include for corporate or complex loans

8. Tax Provisions: Tax-related obligations and withholding requirements - include for complex loans

What schedules should be included in a Undertaking Loan Agreement?

1. Repayment Schedule: Detailed schedule of repayment dates and amounts

2. Security Details: Detailed description of security assets and registration requirements

3. Conditions Precedent Documents: List of required documents and conditions to be satisfied

4. Form of Drawdown Notice: Template for requesting loan disbursement

5. Form of Compliance Certificate: Template for periodic compliance certification

6. Guarantor Documents: Forms and requirements for guarantors

7. Interest Calculation Examples: Examples showing interest calculation methodology

8. Required Insurance: Details of required insurance coverage and terms

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

Jurisdiction

Hong Kong

Publisher

Genie AI

Document Type

Affidavit

Cost

Free to use

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