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Line Of Credit Letter for Hong Kong

Line Of Credit Letter Template for Hong Kong

A Line of Credit Letter is a formal document issued by a financial institution in Hong Kong, establishing a revolving credit facility for a borrower. The document outlines the terms and conditions under which the credit facility is provided, including the credit limit, interest rates, fees, drawdown conditions, and repayment terms. Governed by Hong Kong law, particularly the Banking Ordinance and related financial regulations, this document serves as a legally binding agreement between the lender and borrower, incorporating necessary compliance requirements for Hong Kong's banking sector while providing flexibility for ongoing borrowing needs.

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What is a Line Of Credit Letter?

A Line of Credit Letter is a crucial financial instrument used in Hong Kong's banking sector to establish revolving credit facilities. This document is typically employed when a business or individual requires flexible access to funds up to a predetermined limit, rather than a fixed loan amount. The letter details all essential aspects of the credit arrangement, including facility limits, interest calculations, security requirements, and operational procedures. Under Hong Kong law, these letters must comply with the Banking Ordinance and related regulations, making them standard practice in the territory's financial services industry. The document serves as both a formal offer of credit and, once accepted, a binding agreement that governs the ongoing relationship between the financial institution and the borrower, providing clear terms for both parties while maintaining compliance with Hong Kong's regulatory framework.

What sections should be included in a Line Of Credit Letter?

1. Lender Details: Bank/financial institution's letterhead and contact information

2. Date and Reference: Letter date and any reference numbers

3. Borrower Details: Full name and address of the borrower

4. Salutation: Formal greeting to the borrower

5. Facility Confirmation: Opening statement confirming the offer of the credit facility

6. Facility Amount and Type: Details of the credit limit and nature of the facility

7. Interest Rate and Fees: Applicable interest rates, calculation method, and all associated fees

8. Duration and Renewal: Term of the facility and conditions for renewal

9. Drawdown Conditions: Requirements and process for accessing the credit

10. Repayment Terms: Minimum payment requirements and repayment conditions

11. Events of Default: Circumstances that would constitute default

12. Bank's Rights: Lender's rights regarding facility modification or termination

13. Governing Law: Confirmation of Hong Kong law governance

14. Acceptance: Instructions for accepting the offer and signature blocks

What sections are optional to include in a Line Of Credit Letter?

1. Security Requirements: Include when collateral or security is required for the facility

2. Guarantor Provisions: Include when a guarantor is required for the facility

3. Insurance Requirements: Include when specific insurance coverage is required

4. Financial Covenants: Include for corporate borrowers requiring financial ratio maintenance

5. Purpose Restriction: Include when the facility is restricted to specific uses

6. Cross-Default Provisions: Include when the borrower has other facilities with the bank

7. Currency Provisions: Include for multi-currency facilities

What schedules should be included in a Line Of Credit Letter?

1. Schedule 1 - Facility Terms Summary: Detailed breakdown of all commercial terms including limits, rates, and fees

2. Schedule 2 - Conditions Precedent: List of documents and conditions required before facility availability

3. Schedule 3 - Standard Terms and Conditions: Bank's standard terms and conditions referenced in the letter

4. Schedule 4 - Fee Schedule: Detailed breakdown of all applicable fees and charges

5. Appendix A - Drawdown Notice Template: Standard form for requesting drawdowns under the facility

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

Hong Kong

Publisher

Ƶ

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions


































Clauses


























Relevant Industries

Banking and Financial Services

Manufacturing

Retail

Real Estate

Technology

Construction

Import/Export

Hospitality

Healthcare

Professional Services

Logistics

E-commerce

Relevant Teams

Legal

Finance

Treasury

Credit

Risk Management

Compliance

Corporate Banking

Commercial Banking

Operations

Credit Administration

Documentation

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Financial Controller

Credit Manager

Relationship Manager

Risk Manager

Compliance Officer

Legal Counsel

Company Secretary

Managing Director

Finance Manager

Accounts Manager

Banking Officer

Credit Analyst

Corporate Banking Manager

Industries







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