Regulatory Alerts2005-11-21
Added · Updated
Notice 820 Credit Facilities to a Single Borrower or Group of Borrowers
Finance companies are prohibited from granting or permitting outstanding credit facilities to a single borrower or group of borrowers exceeding 25% of the finance company's capital funds. This 25% limit applies to the higher of the granted limit or the amount outstanding, specifically applying to the amount outstanding for fully-disbursed term loans. Existing facilities exceeding this limit prior to the Finance Companies Act's force were granted a two-year grace period ending on 18 January 1995 to comply, after which only existing fixed-term facilities in repayment may run down with no further extensions allowed.
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