Home
Resource: Asia Pacific Guide to Lending and Taking Security
If taking security
Comparison
Change Jurisdictions
Change Topics
Select Jurisdictions
Background
Background
When considering whether to lend
1. Is it necessary or advisable for any lender, arranger, facility agent or security agent to be licensed, qualified or otherwise entitled to carry on business in this jurisdiction: (a) by reason only of its execution, delivery or performance of the finance documents; or (b) to enable it to enforce its rights under the finance documents?
Sub Topic
2. Will any lender, arranger, facility agent or security agent be deemed to be resident, domiciled, carrying on business or subject to tax by reason only of the execution, delivery, performance or enforcement of the finance documents?
3. Are there any regulatory reporting requirements that lenders must observe in connection with those transactions?
4. Is it necessary to establish a place of business in your jurisdiction in order to enforce any provision of the finance documents?
5. Is a foreign bank/financial institution permitted to approach local entities for business?
6. Are there any post-COVID forbearance laws and regulations in this jurisdiction that may impact the general activities of a lender, arranger, facility agent or security agent?
6. Are there any post-COVID-19 forbearance laws and regulations in this jurisdiction that may impact the general activities of a lender, arranger, facility agent or security agent?
When lending to borrowers
1. Are there any restrictions in relation to the type of borrower who may borrow foreign currency or in relation to the term of foreign currency and/or the amount of foreign currency borrowed by local entities?
2. Are there any restrictions on the rate of interest or default interest that may be charged?
3. Are there any restrictions on particular lenders or classes of lender entering into credit transactions with borrowers?
4. Are there any exchange controls that will apply to payments to be made in foreign currencies or to foreign lenders?
5. Is there any requirement to deduct or withhold tax from any amounts to be paid or repaid to a lender (whether domestic or foreign)? If so, at what rate must tax be deducted and from what kinds of payment?
6. Are there any “thin capitalization” or other rules that may limit the extent to which interest payments may be deducted for tax purposes?
7. Are there any registration, notarization, translation or reporting requirements in relation to the loan documents?
8. Are there any stamp, documentary, registration, notarization or other taxes, duties or fees chargeable in relation to the loan documents? If yes, what are the amounts and when are they payable?
9. Does the law recognize the subordination of the debt that a debtor owes to one creditor to that which the debtor owes to another creditor? If yes, how is this usually effected?
10. Are there any classes of unsecured and unsubordinated creditor whose claims against a debtor would rank equally with or above those of the debtor’s other unsecured and unsubordinated creditors (e.g., the claims of employees and tax authorities or the claims of creditors under particular kinds of instrument)? If yes, what classes of creditors are preferred?
11. Are there any consumer protection or similar laws that apply if credit is made available to individuals or other classes of debtor? If yes, what laws are applicable?
12. Are there any prohibitions or limitations on the extent to which a company can give financial assistance for the purchase of: (a) its own shares or those of any affiliated company; or (b) assets owned by it or any affiliated company?
If taking security
1. Are there any classes of unsecured and unsubordinated creditor whose claims against a debtor would rank equally with or above those of the debtor’s secured creditors?
2. May security given by a company rank in a specified order so as to secure liabilities owed to different creditors of the company in that order and, if that is not possible, is it viable for parties to enter into a contractual arrangement for the purposes of moderating this order?
3. Does this jurisdiction recognise the concept of floating security or similar equivalent (i.e., security over a changing pool of assets that the company giving the security is free to buy, sell and generally deal with)?
4. If so, are there any practical reasons why floating security is difficult to take, maintain or enforce?
5. May security be granted to a trustee to be held on trust for the lenders from time to time, in such a way that a change of lenders does not require new security to be taken?
6. If not, are there any techniques that can be used to achieve substantially the same effect (e.g., parallel debt structures)?
7. If an agent holds security for the lenders rather than a trustee, is it necessary to take new security on a change of lenders? If no, why not? If yes, are there ways to structure the transaction to avoid such a requirement?
8. Under the laws of this jurisdiction, is there any class of asset over which it is difficult or impossible to grant effective and perfected security, or in relation to which any security granted will be of limited effect?
9. Under the laws of this jurisdiction, are there any restrictions on offshore lenders taking security over any class of asset?
10. Must a company receive a corporate benefit in return for giving a guarantee or security? In particular, are there restrictions on the grant of upstream and cross-stream guarantees and security? If yes, briefly what is the effect of these laws?
11. What type of security interests does your jurisdiction recognise, e.g., pledge, charge, mortgage, hypothecation? In relation to each type of security interest, please state the formalities required to create and perfect that security.
12. Are there any registration, translation or notarization requirements in relation to security, guarantees, subordination or intercreditor documents?
13. Are there any stamp, documentary, registration, notarization or other taxes, duties or fees chargeable in respect of security, guarantees, subordination or intercreditor documents? If yes, what are the amounts and when are they payable?
If things go wrong
1. Please provide a brief description of the insolvency regime. In particular what rights and duties do unsecured and secured lenders have on the insolvency of a debtor? Are there any other matters of concern?
2. Is it possible to obtain a moratorium before insolvency?
3. When a company is the subject of a formal insolvency procedure, can the company’s pre-insolvency transactions be set aside?
4. When can a lender enforce its security? Can security be enforced out of court following an event of default (or other contractual trigger event), or is a court order required? Are there any restrictions that apply before a lender may enforce its security?
5. Do any limitation periods apply in relation to bringing an action to enforce security?
6. Is there any particular way in which secured assets must be liquidated on enforcement (e.g., by auction or court sale)?
7. Are there any particular legal or practical difficulties or delays in enforcing security?
8. In relation to enforcement, are there any specific requirements to be borne in mind if the lender is a foreign entity?
9. Is there any reason why you think that arbitration rather than litigation might be advantageous in resolving disputes under the finance documents, and if so, why? Please outline the relative merits of arbitration and litigation, including the ease of enforcement of foreign judgments and foreign awards from different jurisdictions. Is it possible to rely on a hybrid enforcement provision that allows the lenders to opt for either arbitration or litigation as they see fit?
10. Are asymmetrical jurisdiction clauses enforceable? (By this we mean clauses that allow the lenders, but not the borrowers, to make certain choices in relation to choice of jurisdiction and how to litigate. These types of clauses allow the lenders, but not the borrowers, to commence proceedings in any court they choose, but restrict the borrowers to commencing proceedings in one jurisdiction only. This may also allow the lenders, but not the borrowers, to choose whether to litigate the finance documents before a court or to submit to arbitration in relation to them, but restrict the borrowers to either litigation or arbitration, as specified in the agreement).
Working digitally
1. Is it possible for documents to be executed electronically (whether by the manual insertion of a digital signature or the use of an e-signing platform) under the laws of this jurisdiction? If so, is this limited to only particular types of finance documents?
2. Where the witnessing of a signing is contemplated, is it possible for the witness to verify the signature over a live video call?
3. Is it possible to register/perfect security electronically without wet ink signatures?
4. Are there any other legal restrictions that may prevent the parties from executing a finance transaction electronically?
Firm Profile: Bun & Associates
Firm Profile: Bun & Associates
Contributors
No subtopics found
Filter By Region
All
Jurisdictions
No countries found
1 Selected
Select All Displayed
Cancel
Save