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Subordinated Promissory Note Template for Singapore

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Key Requirements PROMPT example:

Subordinated Promissory Note

"Need a Subordinated Promissory Note for a tech startup issuing $2M in debt to a venture debt fund, with quarterly interest payments and a maturity date of March 15, 2025, ensuring the debt is properly subordinated to our existing bank loans."

Document background
A Subordinated Promissory Note is commonly used in Singapore when companies or financial institutions need to raise capital while maintaining existing senior debt arrangements. The document explicitly subordinates the debt to other specified obligations, making it particularly useful for regulatory capital purposes in financial institutions or in structured financing arrangements. Under Singapore law, these notes must comply with specific regulatory requirements, especially when issued by banks or financial institutions. The note typically includes detailed provisions on payment terms, interest calculations, subordination mechanics, and default scenarios.
Suggested Sections

1. Parties: Identifies the issuer and holder of the note

2. Background: Context of the note issuance and relationship between parties

3. Definitions: Key terms used throughout the note

4. Promise to Pay: Core obligation to repay principal amount with specified interest

5. Subordination Provisions: Terms defining the subordinated nature of the debt and ranking in relation to other creditors

6. Interest Rate and Calculation: Details of interest rate, calculation methodology and payment periods

7. Payment Terms: Schedule and method of payments, including prepayment provisions

8. Events of Default: Circumstances constituting default and consequences thereof

9. Governing Law and Jurisdiction: Specification of Singapore law as governing law and jurisdiction

Optional Sections

1. Security: Details of any collateral arrangements or security interests when note is secured by assets

2. Transferability: Terms governing transfer or assignment of the note when intended to be transferable

3. Tax Provisions: Treatment of taxes on payments and withholding requirements

4. Representations and Warranties: Additional assurances and statements by the issuer regarding their capacity and authority

Suggested Schedules

1. Payment Schedule: Detailed repayment schedule including principal and interest payment dates

2. Interest Calculation Examples: Illustrative examples of interest calculations and methodologies

3. Form of Transfer Certificate: Standard form for documenting transfers of the note if transferable

4. Subordination Terms: Detailed terms of subordination including ranking of creditors and payment restrictions

Authors

Alex Denne

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

Relevant legal definitions

























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Industries

Contracts Act (Cap. 53): Primary legislation governing contract formation, validity, and enforcement in Singapore. Essential for basic promissory note structure and enforceability.

Securities and Futures Act (Cap. 289): Regulates securities and financial instruments. Relevant for determining if the note qualifies as a security and associated compliance requirements.

Companies Act (Cap. 50): Governs corporate entities and their ability to issue debt instruments. Important for corporate issuers of subordinated notes.

Civil Law Act (Cap. 43): Contains provisions relevant to civil obligations and remedies, including those related to debt instruments.

Banking Act (Cap. 19): Regulates banking institutions and their ability to issue subordinated debt. Critical if the note involves regulated financial institutions.

MAS Guidelines on Subordinated Debt: Monetary Authority of Singapore's specific guidelines governing subordinated debt instruments, particularly relevant for financial institutions.

Notice 637 on Risk Based Capital Adequacy Requirements: MAS notice detailing capital requirements and treatment of subordinated debt for banks.

Moneylenders Act (Cap. 188): Regulates money lending activities in Singapore. Relevant for ensuring the note structure doesn't inadvertently breach moneylending regulations.

Stamp Duties Act (Cap. 312): Governs stamp duty obligations on financial instruments, including promissory notes.

Bankruptcy Act (Cap. 20): Critical for subordination provisions and understanding creditor rights in case of issuer insolvency.

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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