Account Bank Agreement Project Finance

If both parties have a contractual clause that authorizes entry fees[8], then there is a right, although there is no commitment [9], to assume a task that is not going well, or even the whole project. When and how important are: „What is the boarding process“ must be clearly defined in the security guarantee. [10] The backbone of an account contract is the accounts themselves. Depending on the nature of the underlying transaction, there are significant differences in the complexity of an account agreement. At the extreme end of the complexity continuum is an account contract that must take into account more than one borrower (. B for example, an aggregation structure), onshore and offshore accounts that must address more than one currency (on hard money accounts and accounts for local currencies), several jurisdictions for the accounts themselves, a complex tax structure and, finally, the corresponding construction and trade accounts. Depending on the underlying business transaction, these structures can be significantly simplified. In general, international financing of projects by lenders in a large financial centre (for example. B New York or London) and a borrower with a seat in a third jurisdiction (.

B for example in developing countries) will have at least the following accounts: consortiums of entrepreneurs can participate in large-scale projects. As far as liability is concerned, these contractors can be held accountable either in several respects or in solidarity. Multiple liability means that each contractor is only responsible for its own contribution to the project, while, under joint and multiple liability, each contractor can be sued for the entire commitment and the consortium is then responsible for clarifying the extent of each contractor`s obligations. Lenders prefer joint and several liability because the risk of performance failure is the overall responsibility of each member of the consortium. Partner or equity documents – equity or equity documents govern the terms of participation and the relationship between investors in the project (see practical note: Equity support for project financing) A maintenance reserve account should allow the project to slowly accumulate funds for major maintenance work or a major equipment overhaul.