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Bank Credit Guarantee for Malaysia

Bank Credit Guarantee Template for Malaysia

This document is a legally binding Bank Credit Guarantee agreement governed by Malaysian law, primarily regulated under the Financial Services Act 2013 and Contracts Act 1950. It establishes a guarantee relationship where the guarantor undertakes to secure the obligations of a principal debtor to a bank. The agreement includes comprehensive provisions for the scope of guarantee, enforcement mechanisms, and protection of the bank's interests, while ensuring compliance with Bank Negara Malaysia's guidelines and Malaysian banking regulations. It serves as a critical security document in Malaysian banking transactions, providing banks with additional assurance for their credit facilities.

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What is a Bank Credit Guarantee?

The Bank Credit Guarantee is a fundamental security document in Malaysian banking practice, essential for securing credit facilities extended by banks to borrowers. This document becomes necessary when a bank requires additional security beyond the borrower's own covenant, typically in situations where the borrower's creditworthiness needs enhancement or when regulatory requirements mandate additional security. The guarantee must comply with Malaysian banking regulations, particularly Bank Negara Malaysia's guidelines, the Financial Services Act 2013, and the Contracts Act 1950. It includes detailed provisions on the guarantee's scope, enforcement procedures, guarantor's obligations, and the bank's rights. The document is structured to protect the bank's interests while ensuring fairness and clarity in the guarantee relationship, incorporating both Malaysian legal requirements and international banking best practices.

What sections should be included in a Bank Credit Guarantee?

1. Parties: Identification of the Guarantor, Bank (as beneficiary), and Principal Debtor

2. Background: Recitals explaining the underlying credit facility and purpose of the guarantee

3. Definitions and Interpretation: Definitions of terms used and rules of interpretation

4. Guarantee and Indemnity: Core guarantee obligations, including scope and extent of the guarantee

5. Maximum Liability: Specification of the guarantee amount and any limitations

6. Continuing Security: Provisions establishing the guarantee as a continuing obligation

7. Representations and Warranties: Guarantor's confirmations about their capacity and authority

8. Protection of Bank's Rights: Provisions preserving the bank's rights and remedies

9. Payments: Payment obligations, currency, and payment mechanics

10. Interest: Interest provisions on guaranteed amounts and default interest

11. Costs and Expenses: Allocation of costs, including enforcement expenses

12. Discharge and Release: Conditions for discharge of guarantee obligations

13. Communications: Notice provisions and contact details

14. Assignment and Transfer: Rights to assign or transfer the guarantee

15. Governing Law and Jurisdiction: Malaysian law as governing law and jurisdiction provisions

What sections are optional to include in a Bank Credit Guarantee?

1. Multiple Guarantors: Additional provisions for joint and several liability when there are multiple guarantors

2. Security Provisions: Where additional security is provided alongside the guarantee

3. Foreign Currency Provisions: For guarantees involving foreign currency obligations

4. Islamic Banking Provisions: Additional provisions for Shariah-compliant guarantees

5. Corporate Guarantor Provisions: Special provisions when guarantor is a corporation

6. Counter-Indemnity: Where counter-indemnities are required from other parties

7. Priority Arrangements: Where the guarantee ranks alongside other security or guarantees

8. Step-In Rights: Bank's rights to step into debtor's position in specific circumstances

What schedules should be included in a Bank Credit Guarantee?

1. Schedule 1 - Facility Details: Details of the underlying credit facility being guaranteed

2. Schedule 2 - Conditions Precedent: List of documents and conditions required before guarantee becomes effective

3. Schedule 3 - Form of Demand: Prescribed form for making demands under the guarantee

4. Schedule 4 - Security Documents: List of related security documents (if applicable)

5. Schedule 5 - Notice Details: Detailed contact information for all parties

6. Appendix A - Board Resolution: Format of corporate authorization (for corporate guarantors)

7. Appendix B - Compliance Certificate: Format for periodic compliance certification if required

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Malaysia

Publisher

Ƶ

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use
Relevant legal definitions



































Clauses
































Relevant Industries

Banking and Financial Services

Commercial Lending

Corporate Finance

Small and Medium Enterprises

Real Estate

Manufacturing

Trading and Distribution

Construction

Agriculture

Retail

Technology

Relevant Teams

Legal

Compliance

Credit Risk

Corporate Banking

SME Banking

Operations

Credit Administration

Documentation

Risk Management

Treasury

Corporate Advisory

Business Development

Relevant Roles

Credit Risk Manager

Banking Relationship Manager

Legal Counsel

Compliance Officer

Credit Analysis Officer

Corporate Banking Manager

SME Banking Officer

Chief Risk Officer

Financial Controller

Company Secretary

Banking Operations Manager

Credit Documentation Officer

Security Documentation Specialist

Treasury Manager

Industries








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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