Sfc Subordinated Loan Agreement

Pursuant to a CFS Circular of 29 November 2004, the SFC would need less than four working days to process any application for authorization of subordinated loans, provided that all necessary documents and details meeting the regulatory requirements were provided. We draw attention to the fact that SFC may impose on the subordinated loan such conditions as it deems appropriate in the circumstances. If the proposed subordinated loan is to be alleviated by one or more advances already paid by the lender to the granted company, the loan must be accounted for as an order of priority in the calculation of the borrower`s liquid capital and must not be treated as an authorized subordinated loan unless final approval by the SFC is granted. Pursuant to the Agreement, ATIF HK has agreed to acquire from the Seller 67,000,000 ordinary shares of the Target Company, corresponding to 100% of the Equity Shares of the Target Company and (ii) to acquire from Listco an unsecured interest rate subordinated loan in the nominal amount of HK$10,000,000 (the “Subordinated Loan”) to be made available to the Target Company under a subordinated loan agreement on August 26. 2011, registered between Listco, Target and SFC (the “Subordinated Loan Agreement”) (together the “Acquisition”). In consideration for the acquisition, ATIF HK agreed to pay cash consideration of HK$5,700,000 plus the target company`s NAV (Net Asset Value) at the end of the acquisition, the NAV of which was estimated to be approximately HK$9,600,000 and not to exceed HK$9,700,000. How long does it take for the SFC to approve a subordinated loan? The SFC will verify whether the subordinated loan proposed for approval meets the following requirements (not exhaustive and only as a reference): licensed businesses are encouraged to contact the CFS Intermediary Monitoring Service before applying for a subordinated loan to discuss certain issues, such as the appropriate type of subordinated loan agreement and the acceptable amount of the loan. An “authorized subordinated loan” is a subordinated loan obtained by a licensed company and approved by the SFC. In order for a subordinated loan agreement obtained by a licensed company to be used to improve its ability to meet the applicable minimum liquid capital requirements in accordance with the FRR, the loan must have been fully used under a subordinated loan agreement providing for the lender`s rights to be subordinated to the rights of other creditors in the event that: the insolvency or inability of the licensed company to comply with the FRR. The classification liabilities of a licensed company do not include liabilities resulting from an “authorized subordinated loan”.

This means that the company could raise capital to cover its liquid capital needs through approved subordinated loans, regardless of the amount of outstanding liabilities under those loans. The loan clause, interest rate clause and certification clause are usually the only variable clauses allowed to reflect the characteristics of the loan concerned. Given the borrower`s financial situation and the duration of the loan, the interest payable should not be higher than the prevailing commercial interest rate in the market, although unpaid loans may be acceptable….