A No Interest Promissory Note is a vital financial instrument in the Malaysian legal landscape, commonly used when parties need to formalize a lending arrangement without incorporating interest charges. This document type is particularly relevant in Malaysia's dual banking system, where it can serve both conventional and Islamic financing needs. It's typically used in business loans, family lending, or commercial transactions where parties prefer or require an interest-free arrangement. The document must comply with Malaysian legislation, including the Bills of Exchange Act 1949 and Stamp Act 1949, and should clearly state the principal amount, payment terms, and explicit absence of interest charges. This type of promissory note is especially valuable in situations requiring Shariah compliance or where parties wish to maintain simpler, interest-free lending terms while retaining legal enforceability.
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1. Date and Place of Execution: The date and location where the promissory note is executed, which is crucial for determining jurisdiction and limitation periods
2. Parties: Clear identification of the maker (promisor) and the payee (promisee) with full legal names and addresses
3. Promise to Pay: Unconditional promise to pay a specific sum of money, including the amount in both numbers and words
4. Payment Terms: Clear specification of when and how the payment will be made, including due date and payment method
5. No Interest Declaration: Explicit statement that no interest will be charged on the principal amount
6. Acceleration Clause: Conditions under which the full amount becomes immediately due and payable
7. Governing Law: Specification that Malaysian law governs the promissory note
8. Execution: Signature blocks for all parties and witnesses
1. Security: Details of any collateral or security provided for the promise to pay, used when the note is secured
2. Co-Maker Provisions: Terms relating to co-makers or guarantors, included when there are additional parties guaranteeing the payment
3. Prepayment Terms: Conditions for early payment of the note, included when early payment is specifically allowed or restricted
4. Default Consequences: Specific consequences of default beyond acceleration, used when parties want to specify additional remedies
5. Notice Provisions: Specific requirements for giving notice, included when formal communication procedures are needed
6. Transfer Rights: Terms regarding the transferability of the note, included when the note is intended to be negotiable or non-negotiable
1. Payment Schedule: If payments are to be made in installments, a detailed schedule of payment dates and amounts
2. Security Details: If the note is secured, detailed description of the collateral or security provided
3. Witness Attestation: Formal attestation by witnesses, including their details and signatures
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Real Estate
Small and Medium Enterprises
Corporate Business
Islamic Finance
Retail
Construction
Manufacturing
Professional Services
Agriculture
Family Business
Relevant Teams
Legal
Finance
Treasury
Compliance
Risk Management
Credit Control
Corporate Secretarial
Islamic Banking
Accounts Receivable
Business Development
Relevant Roles
Chief Financial Officer
Finance Manager
Legal Counsel
Company Secretary
Credit Manager
Treasury Manager
Compliance Officer
Financial Controller
Business Development Manager
Risk Manager
Islamic Finance Officer
Accounts Receivable Manager
Corporate Lawyer
Banking Officer
Small Business Owner
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