The Divisible Letter of Credit is a sophisticated financial instrument designed for complex international trade transactions where payments need to be made in multiple installments or against multiple shipments. This document type is particularly relevant in the Malaysian context, where it operates under the Financial Services Act 2013 and follows international UCP 600 guidelines. It provides a secure method of payment in international trade while offering flexibility through its divisible nature. The document enables importers to manage large purchases through staged payments and allows exporters to receive payments for partial shipments, making it particularly useful for long-term supply contracts or projects requiring multiple deliveries. The divisible structure helps manage cash flow and risk for both parties while maintaining the security of a bank-backed payment instrument.
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1. Letter Reference and Date: Unique LC reference number and issuance date
2. Issuing Bank Details: Complete details of the bank issuing the Letter of Credit
3. Beneficiary Information: Full name and address of the party receiving the Letter of Credit
4. Applicant Information: Full name and address of the party requesting the Letter of Credit
5. Credit Amount and Currency: Total value of the Letter of Credit and currency specification
6. Divisibility Terms: Specific terms regarding how the credit can be divided, including minimum division amounts and conditions
7. Expiry Date and Place: Validity period of the LC and location where it expires
8. Shipment Terms: Details of partial shipments, transhipment, and delivery terms
9. Document Requirements: List of required documents for each presentation
10. Payment Terms: Conditions and timing of payment for each division of the credit
11. Governing Law: Specification of Malaysian law as governing law
12. UCP 600 Reference: Statement of applicability of UCP 600 rules
1. Transferability Clause: Include when the LC needs to be transferable to other beneficiaries
2. Confirmation Instructions: Include when confirmation from another bank is required
3. Special Conditions: Include when there are additional requirements or conditions specific to the transaction
4. Islamic Banking Compliance: Include when the LC needs to comply with Shariah principles
5. Revolving Terms: Include when the LC has revolving characteristics
6. Back-to-Back Provisions: Include when the LC is part of a back-to-back arrangement
1. Schedule A - Shipment Schedule: Detailed timeline and requirements for partial shipments
2. Schedule B - Document Requirements: Comprehensive list of required documents and their specifications
3. Schedule C - Division Schedule: Details of how the credit amount can be divided and drawn
4. Appendix 1 - Fee Structure: Breakdown of banking fees and charges
5. Appendix 2 - Amendment Procedures: Procedures for requesting and processing amendments to the LC
6. Appendix 3 - Presentation Guidelines: Detailed guidelines for document presentation under divided credit portions
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Import/Export
Manufacturing
Commodities Trading
Shipping and Logistics
Agriculture
Mining and Resources
Wholesale Trade
Retail Trade
Relevant Teams
Trade Finance
International Banking
Credit Operations
Risk Management
Legal and Compliance
Treasury Operations
Documentary Credits
Corporate Banking
Trade Operations
Financial Control
Relevant Roles
Trade Finance Manager
International Trade Specialist
Letter of Credit Officer
Banking Operations Manager
Credit Risk Officer
Import/Export Manager
Treasury Manager
Documentary Credits Specialist
Trade Operations Officer
Compliance Officer
Financial Controller
Supply Chain Manager
Chief Financial Officer
Banking Relationship Manager
Trade Finance Analyst
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