LLAW6055 Law of International Finance - Research Essay 2024-5
Instructions:
1. Students may form. a group of two people to do this essay.
2. You only need to submit one essay per group via Moodle.
3. The assignment is due on 3rd April 2025, 11pm (HK time).
4. You will need to submit this essay along with the HKU Faculty of Law coversheet with declarations about the use of AI. No coversheet and inaccurate information provided will receive a 50 percent penalty.
5. The minimum word count for this essay is 2,000 words (excluding the questions, standardized wording of the LMA agreement, and references). The maximum word count is 4,000 words (excluding the questions, standardized wording of the LMA agreement, and references).
6. All references and citations in this essay must use OSCOLA reference guidelines – see https://www.law.ox.ac.uk/sites/default/files/migrated/oscola_4th_edn_hart_2012.pdf
7. Essays without any citations and references will be given the mark of zero.
8. No late essays are permitted.
9. Any information that are not provided in the questions below, but form. part of your answers or key to your answers must be stated as “assumptions” or “expectations” in your essay. Note that you may NOT make assumptions about Hong Kong laws (meaning no made-up laws).
10. Note that any information from websites must be cited and referenced.
11. Follow all additional instructions in the question below.
Scenario:
Your client is a newly established developer in Hong Kong, called “Big Dreams Property Group” is registered in Hong Kong. This joint-venture is made up several companies from Hong Kong, the Mainland and Indonesia. However, only the Mainland company has any experience in property development in Shanghai. Also, none of the companies in this group have any experience with advanced technology. Much of their business portfolio is made up of restaurants, hotels, car leasing, clothes manufacturing, shipping, and farming.
They are applying for a syndicate loan for USD400 million for a property development project in Hong Kong’s Northern Metropolis. The developer (your client) shall be building new offices as well as residentials blocks at the San Tin Technopole, an innovation and technology centre which will include the Hong Kong-Shenzhen Innovation & Technology Park (HSITP) located on the Lok Ma Chau Loop and an Innovation & Technology Park in San Tin. It is a big project that is being promoted by the Hong Kong government. However, it is also a risky project because the area has yet to be developed, and there is no government funding, subsidies or financial support provided to developers. Besides, whether there will be many new start-ups and advanced technology companies establishing themselves at HSITP is unknown. Furthermore, there is lots of competition to house new start-ups and advanced technology companies in Macau, Guangzhou, and Hangzhou with many newly proposed technology parks.
Your bank is a major and established bank in Hong Kong, called “Fa Tat” Bank. It is the arranger bank for this syndicate loan. You are an in-house counsel tasked to draft the contract (agreement) for the syndicate loan. Your task is to draft specific parts of this contract. Apart from the total figure stated in this question, all other figures in the contract and information about the client like assets for security you will need to state as assumptions or expectations.
The question is in two folds (total marks 100):
1. You are asked to draft three sections of the contract by your boss. First, the “financial convent”, “general undertakings” and “events of default” sections (Note that any information like numbers and etc. in drafting this section should be entirely made up [within reason]. The information assumed about the client, including figures, need not be accurate. However, state your assumptions, expectations, and legal concerns, if any.).
Here you may include any security you require from your client and any assurances like negative pledges. You can use the Loan Market Association (LMA) agreement clauses 21, 22 and 25 as template for your answers (see Moodle under the news/announcement for the LMA agreement). However, if you have changed any of the standardized wording of the LMA clauses, you must ‘bold and underline’ them. You are NOT required to draft any taxation matters ofthe contract. Second, your bank is the arranger along with 4 other banks (you can create made up names of the 4 banks for this essays), and so you will need to draft a separate section/clause of the contract (not part ofLMA agreement) to reduce the risk (fiduciary duties) by including limitations like a disclaimer (note the law use in this contract must be Hong Kong laws, including statutes and case laws). (40 marks)
2. Also, you are to draft a memo to the Head of Commercial Lending of your bank at the Tokyo office to explain what you have done and why (including legal implications) you have chosen wordings in the three sections (in the above question) to your client and a separate clause for a contract between your bank and the other banks for the syndicate loan. State all the assumptions, expectations, and legal concerns you have about the loan that are relevant to the three sections and a separate clause between your bank and the other banks you have drafted. And how you think your draft can meet the requirements. Assume that the Head of Commercial Lending has some but not a lot of knowledge about Hong Kong laws. (60 marks)