Analysis Of The Legal Problems Of Offshore Financing Loan

Offshore financial market means the market where the financial deals between non-residents are handled, that is, the international financial market where foreign loaners, investors and the borrowers make business with one another. At first, it appears in Europe in 1960s, but now it has been all over the world.The short existence of offshore financial market as well as its special dealing object results to the deficiency on the supervision of individual country. Besides, the particular way of business separates it from the traditional concepts of the business between banks and customers. Both of them lead to the basically difference between contracts of offshore financial market and common deposits or loan contracts.This thesis consists of 4 components.Part one refers to the particular legal problems in offshore financial market. Firstly, the divergence from the average business between banks and customers is based on the introduction of its electronic proceeding, which lays the ground for the whole market, but brings forth certain judicial problems. Secondly, the application of either common laws or continental laws on offshore financial market has disadvantages respectively. The first part play an elementary role in the whole paper.Part two is about the loan on offshore financial market. At first is the overview of the loan on offshore financial market. It contains many types of the loans in which the syndicated loan is toned for the continuance of the contents hereafter. The syndicated loan can be divided further into direct one and indirect one, which develop unlike legal relationship. The second is the scanning of the legal documents and relations of syndicated loan. Without it, the concrete contract clauses, parties and their relation cannot be displayed. Among these papers the loan agreement extrudes itself as most important, which consists of arrangement of loan, inner management of syndication, protective and judicial clauses. After a guiding impression of the relationship of syndicated loan and its agreement, the clue to the legal problems of syndicated loan is to be seized.The third part relates to the legal problems of syndicated loan. The writer lays special emphasis on it. It is discussed still on the formwork of the types of syndicated loan, namely, indirect and direct ones.As to the legal problems of direct mode is subdivided into inner ones and outer ones. The former includes two issues. The one is the organization's legal status, which normally considered as structure of banks instead of a legal entity that loan money to borrower respectively according to the same conditions and clauses, while the members of the organization are far from little of connection among themselves. The other is about agent bank, which act as the window of syndication to serve the financing party. Many exclusive legal problems come to it, for example, its cost, embarrassing judicative position, obligation of good faith. The after includes five matters. One is the judicial status of precondition, to which Common Law and Civil Law give diverse explanations that have great effect to the parties'rights and duties. Another is the problem about statement and assurance, which mix with each other in the loan agreement whereas treated distinctly in Common Law. The financial need may expect blank protection. The following is the acceptance of parties. In the first place is the problem of loaner'acceptance which means mainly the damages under the condition that bank violates of acceptance and refuses to provide borrower of money, while it cannot be executed. In the second place are the problems of loan operation which are made of two disputes thereof. Floating rate is set for and by syndication to ensure of its profit, and have a week voice to speak for the interest of the financial need. When inoccupation of money is discussed, the principle of the first part of this thesis is employed. In case the need party requires one kind of money, occasionally it is in short on the offshore market, and the requirement might not be satisfied. In this fall, the syndicate bank cannot perform in accordance to its acceptance of loan accurately in the same kind of cash. Once more two law families throw out different attitudes. The next place is the problem of repayment which talks about advanced repayment. The last one is the problem of promise clauses. For one thing is negative assurance clause which functions to insure the non-second position of the syndication to other creditor of the financing party. But the paradox appears in relation with the lien and mortgage registration. For the other thing is about pari passu, which binds only if the financing party is bankruptcy or liquidated. Its effect is confined by provisions of law, in other words, not absolute.As to the legal problem of indirect mode, analyzes in the forms of erectness of indirect syndication. They are novation, assignment and sub-loan. Novation cannot be accounted as a type in indirect mode strictly. Since it requests the consent of original parties, the difficulty of deals is increased. Assignment of loan is surrounded by many limitation of law; therefore its probability is challenged. As to sub-loan, the participating banks carry double times risk (from both financing party and leading bank).The fourth part handles about the problems for China's enterprises and banks to pay attention to when take part in the offshore financial market. Above all is for financial agencies, in which the supervision on the borrower and reorganization of correct role are brilliant points. Next is for enterprises, chiefly about the clearance of statement and assurance and the influence of promise clause.At the end of the paper, the author accentuates that the parties should maximize their interest when they make use of offshore financial market. They should be rational, comprehensive, and cautious.