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Intercompany Subordination Agreement

Intercompany Subordination Agreement Template for Malaysia

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Key Requirements PROMPT example:

Intercompany Subordination Agreement

"I need an Intercompany Subordination Agreement for a Malaysian manufacturing group with a parent company and five subsidiaries, where two subsidiaries will be senior creditors and three will be subordinated creditors, with the agreement to take effect from March 1, 2025."

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Document background
The Intercompany Subordination Agreement is essential in Malaysian corporate group structures where there are multiple layers of intercompany debt and a need to establish clear payment priorities. It is particularly important in scenarios involving corporate restructuring, group financing arrangements, or when establishing security packages for external financing. The document ensures compliance with Malaysian corporate and financial services laws while providing certainty regarding the ranking of different intercompany obligations. This agreement is crucial for risk management and corporate governance, as it helps prevent conflicts between group entities regarding debt priority and establishes clear protocols for payment and enforcement rights. It becomes especially relevant in situations of financial distress or when implementing group-wide financing strategies.
Suggested Sections

1. Parties: Identification of all participating companies, including the parent company, subordinated creditors, and senior creditors

2. Background: Context of the agreement, explaining the existing debts and reason for subordination

3. Definitions and Interpretation: Definitions of key terms including Senior Debt, Subordinated Debt, Enforcement Action, etc.

4. Subordination: Core provisions establishing the subordination of specified debts and ranking of payments

5. Undertakings by Subordinated Creditors: Commitments from subordinated creditors regarding their debt, including restrictions on payments and enforcement

6. Payment Restrictions: Specific conditions under which payments on subordinated debt are prohibited or permitted

7. Turnover of Receipts: Obligations to turn over any unauthorized payments received in breach of subordination

8. Enforcement Restrictions: Limitations on enforcement actions by subordinated creditors

9. Application of Proceeds: Order of application of any proceeds received from the debtor

10. Changes to the Parties: Process for adding or removing parties to the agreement

11. Representations and Warranties: Standard representations regarding authority, binding obligations, and non-conflict

12. Duration and Release: Term of the agreement and conditions for release from subordination obligations

13. Miscellaneous Provisions: Standard boilerplate clauses including notices, amendments, governing law, etc.

Optional Sections

1. Security Provisions: Required when subordinated debt is secured, addressing ranking and enforcement of security interests

2. Intercreditor Provisions: Needed when there are multiple classes of creditors beyond simple senior/subordinated structure

3. Buy-out Rights: Optional provisions allowing subordinated creditors to buy out senior debt under specific circumstances

4. Payment Blockage Mechanism: Detailed payment blocking provisions for more complex arrangements

5. Subordinated Creditor Committee: Required for agreements with multiple subordinated creditors to coordinate decision-making

6. Tax Provisions: Specific tax-related provisions when intercompany debt has significant tax implications

7. Regulatory Compliance: Required when subordination agreement needs to comply with specific regulatory requirements

Suggested Schedules

1. Schedule 1 - Form of Accession Deed: Standard form for new parties to accede to the agreement

2. Schedule 2 - List of Senior Debt: Detailed listing of all senior debt covered by the agreement

3. Schedule 3 - List of Subordinated Debt: Detailed listing of all subordinated debt covered by the agreement

4. Schedule 4 - Form of Notice of Subordination: Template for notifying relevant parties of the subordination arrangement

5. Schedule 5 - Corporate Structure Chart: Diagram showing relationship between all parties to the agreement

6. Schedule 6 - Payment Terms: Detailed terms and conditions for permitted payments on subordinated debt

Authors

Alex Denne

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

alex.den.21@genieai.co
Relevant legal definitions

































Clauses


































Relevant Industries

Banking and Financial Services

Manufacturing

Real Estate and Property Development

Energy and Utilities

Technology and Communications

Construction and Infrastructure

Healthcare

Retail and Consumer Goods

Mining and Natural Resources

Transportation and Logistics

Relevant Teams

Legal

Finance

Treasury

Corporate Secretarial

Risk Management

Compliance

Corporate Development

Financial Planning and Analysis

Tax

Corporate Finance

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Secretary

Financial Controller

Risk Manager

Group Finance Manager

Compliance Officer

Corporate Finance Manager

Legal Director

Treasury Director

Group Treasurer

Senior Finance Manager

Corporate Development 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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