MALAYSIA Law and Practice Contributed by: Dilys Tan, Adnan Sundra & Low
Upon the occurrence of such events of default/ dissolution events, the holders of the ABS may declare that an event of default/dissolution event has occurred – such ABS shall become immedi - ately due and payable, and the security granted thereunder shall become immediately enforce - able. 3.7 Principal Indemnities The seller/originator would indemnify the SPE against all claims, losses, damages, costs, expenses and deficiencies suffered, incurred or sustained by the SPE as a result of any breach by the seller/originator or its representatives. The servicer would indemnify the SPE from any loss, damage, liability and expenses incurred or sustained by the issuer as a result of a default by the servicer in the performance or observance of its obligations under the servicer agreement, and from any misrepresentation by the servicer. The SPE, on the other hand, would provide the trustee for the benefit of the holders of the ABS the indemnities as usually provided in a normal bond/sukuk transaction. 3.8 Bonds/Notes/Securities The terms and conditions of the ABS are set out in the trust deed, and would generally comprise the typical terms and conditions of ABS, includ - ing but not limited to the following: • redemption of the ABS, whether early or man - datory redemption; • trigger events; • covenants/undertakings by the SPE; • events of default/dissolution events; • limited recourse to the SPE; and • meeting provisions for ABS holders’ meet - ings.
Additionally, pursuant to the LOLA Guidelines, the trust deed must also provide for: • covenants on the SPE to give effect to the bankruptcy-remoteness of the SPE; and • a provision that would entitle the trustee to appoint a receiver in respect of the assets of the SPE in the event of default/dissolution. 3.9 Derivatives No derivatives are used in a securitisation trans - action. 3.10 Offering Memoranda In Malaysia, the offering memoranda typically take the form of an information memorandum, which is a marketing and disclosure document describing the securitisation transaction and the terms of the ABS, the SPE, the originator, the assets and the risks in investing in the ABS. The LOLA Guidelines set out the minimum con - tents to be included in the information memoran - dum for ABS, such as the following. • Risk factors in investing in the ABS. • A detailed description of the structure of the securitisation transaction and all significant agreements relevant to the structure. • A corporate profile of all parties involved. • A detailed description of the securitised assets, including: (a) cash flow profile; (b) ageing of cash flows; and (c) if available, historic levels of arrears or rates of default for the assets and stress levels of cash flows. • An explanation on the fund flow, particularly on: (a) how the cash flow from the assets is expected to meet the SPE’s obligation to the holders of the ABS;
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