Re: Legal Opinion regarding liability under Deed of Corporate Guarantee.
We refer to your letters dated 26 February 2008 on the above subject.
From perusal of your letter and the provided documents it appears that Bank 1(“the Bank”) is going to sanction various credit facilities in favour of Company 1 (“Company 1”). As one of the securities to the said facility Company 2 (“Company 2”) has agreed to execute a corporate guarantee in favour of the Bank.
Company 2 is a shareholder or Company 1.
In such circumstances you require our legal opinion as to the extent of Company 2’s liability under the draft Deed of Corporate Guarantee.
According to the draft Deed of Corporate Guarantee, in proportion to the percentage of shares owned by Company 2 in Company 1, Company 2 shall be liable to repay to the Bank 17.61% of the total outstanding liability owned by Company 1 to the Bank.
From perusal of the Memorandum and Articles of Association of Company 1 it appears that Company 2 was not a shareholder at the time of incorporation of Company 1. Please ensure whether Company 2 at present owns 17.61% of shares out of the total shares of Company 1 if not then the draft Deed of Corporate Guarantee should be revised accordingly.
If you have any further query, please do not hesitate to contact the undersigned.
All documents referred to us are returned herewith.
For: “The Lawyers & Jurists”