Regulatory Alerts2008-01-25
Practice Note 1 – Specific Requirements and Disclosure of Information on Primary Collateralised Loan Obligations Transaction
The Securities Commission issued Practice Note 1 to establish specific regulatory and disclosure requirements for primary collateralised loan obligations transactions, excluding those fully guaranteed by financial institutions. The Note mandates that principal advisers and originating banks exercise due diligence in borrower selection and disclose detailed borrower profiles, lending policies, and aggregate financial data in the information memorandum. It further requires enforceable loan agreement terms, clear specification of repayment dates, and defined responsibilities for transaction parties to ensure transparency and facilitate asset recovery in case of default.
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