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Revolving Promissory Note Template for Hong Kong

A Hong Kong law-governed Revolving Promissory Note is a negotiable financial instrument that documents a promise to pay a specified sum of money under a revolving credit facility. It combines the formal requirements of a promissory note under the Bills of Exchange Ordinance with revolving facility features, allowing the borrower to draw down, repay, and redraw funds up to an agreed maximum amount. The document incorporates essential elements such as payment terms, interest calculations, and events of default, while complying with Hong Kong's regulatory framework for negotiable instruments and lending arrangements.

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What is a Revolving Promissory Note?

The Revolving Promissory Note is commonly used in Hong Kong's commercial lending landscape when parties require a flexible financing arrangement that allows for multiple drawdowns and repayments over time. This document type is particularly useful for businesses with cyclical cash flow needs or ongoing working capital requirements. Governed by Hong Kong law, particularly the Bills of Exchange Ordinance, it must contain an unconditional promise to pay and meet specific legal requirements for negotiable instruments. The revolving nature distinguishes it from standard promissory notes by allowing the borrower to repeatedly access funds up to the facility limit, provided previous drawdowns have been repaid. The document typically includes detailed provisions on interest calculation, payment mechanisms, events of default, and enforcement rights, making it a crucial tool for both financial institutions and corporate borrowers in various financing arrangements.

What sections should be included in a Revolving Promissory Note?

1. Header Information: Date, note number, and title of the instrument

2. Parties: Clear identification of the maker (promisor) and payee (promisee) with full legal names and addresses

3. Promise to Pay: Unconditional promise to pay a specific sum or up to a maximum facility amount

4. Revolving Nature: Terms specifying the revolving nature of the facility, including drawdown and repayment mechanisms

5. Interest Rate: Specification of interest rate, calculation method, and payment frequency

6. Payment Terms: Details of payment schedule, method, and place of payment

7. Events of Default: Circumstances under which the note becomes immediately due and payable

8. Governing Law: Specification of Hong Kong law as governing law

9. Execution Block: Signature blocks for maker and witness, with date of execution

What sections are optional to include in a Revolving Promissory Note?

1. Security Provisions: Include when the note is secured by collateral or guarantees

2. Demand Features: Include when the note is payable on demand rather than at a fixed maturity

3. Prepayment Terms: Include when early repayment options are permitted

4. Transfer Provisions: Include when the note is intended to be transferable

5. Default Interest: Include when there's a different interest rate applicable to overdue amounts

6. Cost and Expenses: Include when enforcement costs are to be recovered from the maker

What schedules should be included in a Revolving Promissory Note?

1. Drawdown Schedule: Format and requirements for drawdown requests under the revolving facility

2. Interest Calculation Examples: Examples showing how interest is calculated in various scenarios

3. Security Details: If applicable, details of any security or collateral provided

4. Repayment Schedule: If applicable, schedule showing minimum repayment requirements or amortization

Authors

Alex Denne

Advisor @ 蜜桃传媒AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Hong Kong

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use

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