Comfort (Keepwell) Letters are considered to be non-legally binding, given only to provide a lender with comfort as to the intention of the parent company of a group. If the intention is to create a medium level of legal obligation on the parent company, suggest to use a guarantee.
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The document titled 'Letter of Comfort (Keepwell) to Bank / Financial Institution' is a formal letter that serves as a guarantee or assurance from the sender to a lender or financial institution. The letter is addressed to the lender and begins with a salutation. It acknowledges the existence of a loan agreement between the lender and the borrower, and confirms that the sender is the legal and beneficial owner of a certain percentage of the borrower's shares.
The letter further states that the sender agrees not to dispose of any of the shares held by them in a way that would reduce their shareholding to a minority and non-controlling position without obtaining written consent from the lender. This provision ensures that the lender has a say in any significant changes to the ownership structure of the borrower.
The sender of the letter also confirms that they have reviewed the loan agreement and are familiar with its terms. This demonstrates their understanding and acceptance of the obligations and responsibilities outlined in the agreement.
Additionally, the letter emphasizes that the sender has a policy in place, and will continue to enforce it, to influence the borrower in a manner that ensures the borrower meets its obligations towards its lenders and other creditors. This statement reassures the lender that the sender will actively work to ensure the borrower's financial stability and ability to fulfill its obligations.
The document concludes with an account sign block, where the sender's job title and company are mentioned. This provides further credibility and authenticity to the letter.
Overall, the 'Letter of Comfort (Keepwell) to Bank / Financial Institution' is an important document that serves as a guarantee from the sender to the lender, ensuring the lender's interests are protected and providing reassurance regarding the borrower's financial stability and ability to meet its obligations.
1. Enter the relevant information: Fill in the account details, job title, company, and address in the designated fields of the document.
2. Address the letter to the lender: Make sure to include the correct lender's name and address in the salutation.
3. Reference the loan agreement: Mention the date of the loan agreement and clearly state that the letter is referring to it.
4. Confirm ownership of shares: Explicitly state the percentage of shares owned by the sender in the borrower's company.
5. Agree not to dispose of shares without consent: Clearly state the commitment to obtain written consent from the lender before reducing the shareholding to a minority and non-controlling position.
6. Familiarize with the loan agreement: Express acknowledgment and understanding of the terms and conditions outlined in the loan agreement.
7. Highlight policy to influence the borrower: Emphasize the existence of a policy aimed at ensuring the borrower meets its obligations towards lenders and other creditors.
8. Include jurisdiction clause: If required, add a jurisdiction clause specifying the applicable laws and jurisdiction for any disputes.
9. Sign the letter: Append the sender's signature, job title, and company to authenticate the letter.
10. Proofread and review: Double-check the content of the letter for accuracy, clarity, and coherence before sending it to the lender.