Facility Agreement in Malay: Understanding the Basics

Facility agreement, or perjanjian kemudahan in Malay, is an important legal document that outlines the terms and conditions of a loan or credit facility between a lender and a borrower. This agreement sets out the scope and limitations of the facility, the repayment terms, interest rate, as well as the obligations and responsibilities of both parties.

In Malaysia, facility agreements are governed by the Contracts Act 1950 and the Financial Services Act 2013. These laws ensure that facility agreements are legally binding and enforceable between the parties involved.

Facility agreements can be used for various types of facilities, including overdrafts, term loans, revolving credit facilities, and trade finance facilities. These facilities can be secured or unsecured, depending on the type of collateral provided by the borrower.

In a secured facility agreement, the borrower provides an asset as collateral to secure the loan, such as property, shares, or machinery. The lender has the right to seize the collateral if the borrower defaults on the loan. Unsecured facility agreements, on the other hand, do not require collateral, but typically have higher interest rates and stricter credit requirements.

Facility agreements also include covenants, which are promises made by the borrower to fulfill certain obligations during the term of the loan. These covenants may include maintaining a certain level of financial performance, providing regular financial reports, or obtaining the lender’s consent before taking certain actions such as selling assets or acquiring new businesses.

As an important legal document, facility agreements should be carefully reviewed and negotiated to ensure that both parties understand their rights and obligations. It is recommended that borrowers seek legal advice to ensure that the facility agreement is in their best interest and that they fully understand the terms of the loan.

In conclusion, facility agreements in Malay are important legal documents that outline the terms and conditions of loans or credit facilities between lenders and borrowers. These agreements are governed by the Contracts Act 1950 and the Financial Services Act 2013 and should be reviewed and negotiated carefully to ensure that both parties understand their obligations and rights. If you need further assistance in understanding facility agreements in Malay, it is advisable to seek legal advice.