The Evergreen Letter of Credit is a sophisticated banking instrument designed for businesses requiring continuous financial assurance in their trading relationships. It is particularly relevant in the Malaysian context, where it must comply with both conventional and Islamic banking frameworks. This document automatically renews for successive periods unless specific termination notice is given, making it ideal for ongoing business relationships with regular trading patterns. The instrument is governed by Malaysian law, specifically the Financial Services Act 2013 and Bank Negara Malaysia regulations, while also adhering to international banking practices such as UCP 600. It provides security for regular transactions without the need for frequent reissuance, reducing administrative burden while maintaining financial protection for all parties involved.
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1. Bank Details and Reference Number: Issuing bank's details, LC reference number, and date of issuance
2. Beneficiary Information: Complete details of the beneficiary including name, address, and contact information
3. Applicant Information: Complete details of the applicant (buyer) including name, address, and contact information
4. Credit Amount and Currency: Specification of the maximum credit amount and currency
5. Type and Form of Credit: Specification that this is an evergreen LC and its form (irrevocable)
6. Automatic Extension Clause: Details of the automatic renewal mechanism, including extension period and conditions
7. Non-Extension Notice Period: Period within which the bank must notify of any non-extension
8. Expiry Conditions: Conditions under which the LC can be terminated or will expire
9. Drawing Terms and Conditions: Specific conditions and documentation required for drawing under the LC
10. Governing Law and Jurisdiction: Statement that Malaysian law governs the LC and jurisdiction details
1. Transferability Clause: Include when the LC needs to be transferable to other beneficiaries
2. Revolving Terms: Include when the LC needs to revolve in value or time
3. Red Clause: Include when advance payment features are required
4. Green Clause: Include when storage facility arrangements are needed
5. Islamic Banking Compliance: Include when the LC needs to comply with Shariah principles
6. Special Payment Conditions: Include when specific payment terms or conditions apply
7. Force Majeure Provisions: Include when specific force majeure protections are needed
1. Schedule A - Required Documents: Detailed list of all required documents for drawing under the LC
2. Schedule B - Payment Terms: Detailed payment terms, mechanics, and timing
3. Schedule C - Goods Description: Detailed description of goods or services covered by the LC
4. Appendix 1 - Form of Drawing Request: Standard format for beneficiary's drawing request
5. Appendix 2 - Form of Extension Notice: Standard format for bank's extension notice
6. Appendix 3 - Form of Non-Extension Notice: Standard format for bank's non-extension notice
7. Appendix 4 - Authorized Signatories: List of authorized signatories and specimen signatures
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Import/Export
Commodities Trading
Retail
Energy
Construction
Agriculture
Mining
Shipping and Logistics
Wholesale Distribution
Relevant Teams
Legal
Finance
Treasury
Trade Operations
Risk Management
Compliance
International Trade
Banking Operations
Credit Administration
Documentary Credits
Trade Finance
Relevant Roles
Trade Finance Manager
International Trade Specialist
Treasury Manager
Chief Financial Officer
Finance Director
Banking Relationship Manager
Trade Operations Manager
Credit Manager
Risk Manager
Compliance Officer
Import Manager
Export Manager
Financial Controller
Legal Counsel
Documentary Credits Specialist
Trade Finance Officer
Banking Operations Manager
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