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Loan Sale Agreement for Malaysia

Loan Sale Agreement Template for Malaysia

A comprehensive legal agreement governed by Malaysian law that documents the sale and transfer of loan assets from one party (seller) to another (purchaser). The agreement covers crucial aspects including the transfer mechanics, purchase price, representations and warranties, and regulatory compliance requirements under Malaysian financial regulations, particularly the Financial Services Act 2013 and Contracts Act 1950. It includes detailed provisions for loan portfolio transfer, borrower notifications, data protection compliance, and where applicable, security interest transfers and registration requirements.

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What is a Loan Sale Agreement?

The Loan Sale Agreement is a crucial document used in Malaysian financial markets when one financial institution wishes to transfer loan assets to another entity. This agreement is commonly used in scenarios such as portfolio optimization, non-performing loan sales, or strategic divestments. It must comply with Malaysian regulatory requirements, including those set by Bank Negara Malaysia and the Financial Services Act 2013. The document typically includes detailed schedules of the loans being transferred, purchase price mechanisms, representations about the loan quality, and provisions for borrower notification and data transfer. It's essential for both parties to ensure proper due diligence and obtain necessary regulatory approvals before execution.

What sections should be included in a Loan Sale Agreement?

1. Parties: Identification of Seller and Purchaser with full legal names and registration details

2. Background: Context of the transaction, brief description of the loan portfolio, and purpose of the agreement

3. Definitions and Interpretation: Defined terms, interpretation rules, and references to Malaysian law requirements

4. Sale and Purchase: Core transaction terms including description of loans being sold and purchase price

5. Completion: Timing and mechanics of the transfer, including conditions precedent and completion requirements

6. Payment Provisions: Purchase price calculation, payment method, and any adjustments

7. Transfer Mechanics: Legal mechanism for transferring the loans under Malaysian law

8. Seller's Representations and Warranties: Warranties about the loan portfolio, seller's authority, and compliance with laws

9. Purchaser's Representations and Warranties: Warranties about purchaser's authority and capability to acquire the loans

10. Regulatory Compliance: Compliance with Malaysian banking and financial services regulations

11. Data Protection: Provisions ensuring compliance with PDPA 2010 for borrower data transfer

12. Confidentiality: Protection of confidential information and transaction details

13. Notices: Communication methods and contact details for formal notices

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

15. General Provisions: Standard boilerplate clauses including amendments, waivers, and severability

What sections are optional to include in a Loan Sale Agreement?

1. Security Transfer: Required for secured loans, detailing transfer of security interests and perfection requirements

2. Servicing Arrangements: Include if there's a change in loan servicing arrangements or if seller continues as servicer

3. Consumer Protection: Required for consumer loans, addressing compliance with Consumer Protection Act 1999

4. Foreign Exchange: Include for loans in foreign currencies, addressing exchange rate mechanisms

5. Tax Provisions: Detailed tax treatment section if complex tax implications exist

6. Islamic Finance Compliance: Required for Shariah-compliant loans, ensuring compliance with Islamic banking principles

7. Step-in Rights: Optional provisions for purchaser's rights to step into seller's position in certain circumstances

8. Further Assurance: Additional provisions for future actions needed to perfect the transfer

What schedules should be included in a Loan Sale Agreement?

1. Schedule 1 - Loan Portfolio Details: Detailed list of loans being sold including key terms, outstanding amounts, and borrower details

2. Schedule 2 - Form of Transfer Notice: Template for notices to borrowers regarding the loan sale

3. Schedule 3 - Completion Requirements: Detailed list of documents and actions required for completion

4. Schedule 4 - Seller's Power of Attorney: Form of power of attorney for seller to execute post-completion actions

5. Schedule 5 - Security Documents: List and copies of security documents for secured loans

6. Schedule 6 - Purchase Price Calculation: Detailed methodology for calculating the purchase price

7. Appendix A - Due Diligence Findings: Summary of key due diligence findings and disclosed matters

8. Appendix B - Regulatory Approvals: Copies of required regulatory approvals and correspondence

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

Sale Agreement

Cost

Free to use
Relevant legal definitions








































Clauses


































Relevant Industries

Banking

Financial Services

Investment Management

Asset Management

Debt Collection

Real Estate Finance

Corporate Finance

Private Equity

Debt Trading

Financial Technology

Relevant Teams

Legal

Finance

Risk Management

Compliance

Treasury

Credit

Corporate Finance

Investment

Portfolio Management

Operations

Due Diligence

Regulatory Affairs

Relevant Roles

Chief Financial Officer

Head of Legal

Portfolio Manager

Credit Risk Manager

Compliance Officer

Investment Manager

Treasury Manager

Legal Counsel

Transaction Manager

Due Diligence Officer

Risk Officer

Corporate Finance Manager

Debt Collection Manager

Portfolio Analyst

Regulatory Compliance 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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