Facilitation Agreement: Definition & Sample

A facilitation agreement is a legal document that helps to facilitate the transfer of property, such as land, from one individual or entity to another. This document can help to speed up the process and make the transfer of property simpler for both parties involved. For example, if a party considers selling or purchasing property, a facilitation agreement may be suitable.

A facilitation agreement will include information on the previous owner or seller and the future owner or buyer. It will also include insurance responsibilities, fees or payment schedules, and what will happen if the deal falls through.

Common Sections in Facilitation Agreements

Below is a list of common sections included in Facilitation Agreements. These sections are linked to the below sample agreement for you to explore.

Facilitation Agreement Sample

INVESTMENT FACILITATION AGREEMENT

(Foreign Institutional Investor (“FII”))

DMS INDIA MID CAP INDEX FUND

Dated: This __________day of __________, _______

INVESTMENT FACILITATION AGREEMENT

This INVESTMENT FACILITATION AGREEMENT (hereinafter referred to as this “Agreement” ), dated this .. th day of …. entered into:

IIFL Inc., a company incorporated under the laws of the State of New York, United States of America and having its registered office in New York ( "FII" ); And

……DMS India MidCap Index Fund a Business Trust incorporated under Pennsylvania and having its registered office at 2619 Leiscz’s Bridge Road, Suite 200, Leesport, PA 19533 (the "Company" );

In this Agreement, unless the context otherwise requires, the Company and the Investment Facilitator shall hereinafter be jointly referred to as the “ Parties ”, and severally as the “ Party ”.

The FII is a company registered with the Securities and Exchange Board of India ( "SEBI" ) as a Foreign Institutional Investor ( "FII" ) under the Securities and Exchange board of India (Foreign Institutional Investors) Regulations, 1995 (the "Regulation" ). It wishes to facilitate the Company in investing into India through the FII route, subject to compliance with extant regulations.

The Company is a company incorporated in The United States and organised for the principal purpose of making investments, in India and other parts of the world ( "Investments" ) on behalf of investors, including but not limited to investments in equity and preference shares, commercial paper, bonds, warrants, options, non-convertible, partly convertible and fully convertible debentures, and any other financial instruments that the Board of Directors of the Company (the "Company Board" ) may approve ( "Portfolio Companies" ); and

The Company wishes to register itself, if permissible under extant regulations, as a sub-account of the FII under the Regulations subject to the terms and conditions herein after set forth.

NOW, THEREFORE, IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO as follows:

In this Agreement the following words and expressions shall have the following meanings:

" Affiliate " means a relative, Hindu undivided family, a firm, a

joint venture, a partnership, a company or an entity that

directly or through one or more intermediaries Controls or is

controlled by or is under common Control of the Party

“ Agreement ” means this Agreement as originally executed and as may be amended, modified, supplemented or restated from time to time by the mutual agreement of the Parties.

“ Board ” means the board of directors of the Company.

“ Company ” means the applicant for Sub-account registration and shall refer to all type of organisations including a Fund.

“ Sub Account ” shall have the meaning assigned to it in the Securities and Exchange Board of India ( Foreign Institutional Investors ) Regulations 1995;

1.2 Terms not defined herein, when used even in the recitals hereto shall have the meaning given to them under the Securities Exchange Board of India (SEBI) Rules.

Subject to the supervision of the Board, the Company hereby appoints the FII to assist the Company in formulating and implementing a program for registration as a sub-account with Securities and Exchange Board of India ( SEBI ), monitoring of Investments, and the FII hereby accepts such appointment and agrees to perform its obligations in accordance with the terms hereof. The FII undertakes to facilitate and act as an investment catalyst by assisting in the registration and regulation and investment process.

The Company may request the FII to register it as a sub-account, subject to compliance with applicable regulations. After satisfying itself of the regulatory requirements and based on such checks, tests, inquiry or investigation as it may deem fit, the FII may process the request for registration received from the Company.

Authority and Duties of the FII and the Company

The FII shall, upon receipt of a written request from the Company, undertake all necessary steps to recommend for the Company for registration with SEBI as its sub-account under the Regulation.

The FII shall check as to the eligibility of the applicant for registration as a sub-account, compliance with the SEBI and RBI regulations, the know your client documentation and generally satisfy itself that the applicant is eligible for registration and form a prima facie opinion as to the desirability of recommending registration.

The FII while considering the application may call for such additional information as it may deem necessary to enable a better understanding of the applicant and its business status, resources, investment restrictions, investment objectives and may require such credit investigation as it may deem necessary or desirable. The FII may also call for information as the financial standing of the persons investing and impose such conditions as to operations, investment or generally as it may consider desirable in connection with the operations of the sub-account.

The FII may in absolute discretion refuse to recommend an application for registration as a sub-account and its decision shall not be called to question;

The FII will act as the investment facilitator to the Company and shall, in that capacity, supervise and monitor the investments made on behalf of the Company. As required by and in terms of the Securities and Exchange Board of India ( Foreign Institutional Investors ) Regulations, 1995, the Company hereby authorises the FII to invest on its behalf. Every trade to be put through by the Company would be first checked by the FII for compliance with the extant regulations of the Stock Exchanges, RBI, SEBI or any other relevant regulatory authority as may be stipulated from time to time. In exercise of this function, the FII may refuse to permit any trade to be put through, if in its considered judgement this may be in violation of the applicable regulations.

The FII is specifically authorised to cut, square off, reverse or otherwise close out any position of the sub-account to comply with the circulars, notifications, rules and regulations applicable to the FII and/or sub-accounts, as may be specified by SEBI or stock exchanges or clearing members, on securities positions in underlying or derivative segments or otherwise. In particular, the positions may be cut if the positions of FII with all its sub-accounts or of the Company exceed the limits set by the stock exchanges / professional clearing member, SEBI or if the margins maintained with the professional clearing member / stock exchanges / SEBI or margin levels maintained by the Company as compared to those stipulated by the FII are inadequate to meet the on-going commitments of the sub-account.

Unless the Company is likely to violate any regulations, the FII shall not, without the prior approval of the Company Board:

provide any instructions to a custodian or Bank in India in respect of Investments which would cause the Company to knowingly do any act which would make it impossible to carry on the ordinary business of the Company.

provide any instructions to a custodian or Bank in India in respect of Investments which would cause or permit the Company to acquire or dispose of any Investment in violation to the Regulations.

The FII shall have no authority to enter into any agreement on behalf of the Company, except upon the prior written consent of the Company Board.

All decisions in connection with Investments, including without limitation approving acquisitions and dispositions of Investments and effecting transactions on behalf of the Company, shall be the exclusive responsibility of the Company Board.

The securities may be registered in the name of the IIFL Inc. a/c ______ or directly in the name of the sub-account i.e. _______.

The Company shall ensure to maintenance of proper books of accounts, records, documents etc. in respect of all the Investments made in accordance with all applicable laws, rules and regulations, and shall submit to the FII any information, record or documents in this regard, as the FII may require.

The Company shall cause its activities to be managed in a manner as to comply with the applicable regulations and shall keep the FII promptly informed of any infarction of law or unusual events. The Company shall also comply with the Anti - Money Laundering Regulations of the United States of America and of the respective jurisdictions of its shareholders.

The Company shall promptly furnish such information as may be sought by the FII in respect of its shareholders / investors to enable the FII to discharge its functions under this agreement or under any applicable laws.

The Company acknowledges the fact that notwithstanding anything contained in clause 3.7 herein, the FII has the absolute authority to change without reference to the Company, the custodian(s), professional clearing member, broker(s ) or banker(s) to the Company.

The Company hereby represents warrants and declares that it does not have any open Participatory Note (“P Note”) and if the Company has a P Note it will have to wind up such P Note before entering this Agreement. For the avoidance of doubt, this sub-clause 3.13 shall only be applicable to an existing sub-account under any other FII and is shifting to the FII but shall not be applicable to the Company if it is registering as a new sub-account.

The Company has taken full cognizance of the Press Release bearing PR 286/2007 issued by SEBI on 25 th of October 2007, in respect of the issuance of Participating Notes (“PN”) and Offshore Derivative Instruments (“ODI”); and the restrictions and the limitations relating to registration of FIIs viz issuance of PN/ODI’s by some FIIs/Sub-accounts, the linkages (or absence thereof) between quantum of PNs/ODIs issued against the capital flows into the Indian markets as summarised hereunder.

“Participatory Notes and Derivative Instruments

As per SEBI disclosure norms governing issuance of Offshore Derivative Instruments (“ODI’s”) (including Participatory Notes or such other derivative instruments whose value is directly linked to underlying Indian securities) by any FII, an FII is required to disclose to SEBI on a monthly basis in a prescribed format details of such instruments. Such details include the names and the locations of persons to whom the offshore derivative instruments are issued; the nature and type of investors; the quantity and value of the offshore derivative instruments; and the underlying Indian securities. Information for each calendar month must be submitted within seven days following the end of such calendar month. In light of the above, if any FII or its clients issue any ODI’s, the details of the investors therein will have to be disclosed by the FII. Accordingly any FII issuing any ODI’s to the Partnership will be required to file such disclosure with SEBI. FIIs are allowed to issue Participatory Notes (“P-Notes”) and ODI’s to those entities that are regulated by any relevant regulatory authority in the countries of their incorporation or establishment. Further, effective from October 25, 2007, FIIs and their Sub-accounts were prohibited from issuing/renewing ODI’s with underlying derivatives. SEBI has also prohibited the issuance of P-Notes by Sub-accounts of FIIs. FIIs and their Sub-accounts are required to wind up their current positions of ODI’s with underlying derivatives within a period of 18 months from October 25, 2007. FIIs currently issuing offshore derivative instruments with the notional value of the ODI’s outstanding (excluding derivatives) as a percentage of their Assets Under Custody (“AUC”) of less than 40% shall be allowed to issue offshore derivative instruments at an incremental rate of 5% per annum of their AUC in India until such time their percentage reaches 40%. FIIs with notional value of ODI’s outstanding (excluding derivatives) as a percentage of their AUC exceeding 40% shall only be allowed to issue ODI’s against cancellation/redemption/closing out of existing offshore derivative instruments of at least the equivalent amount. SEBI has also clarified that the applicable date of calculation of the AUC in India for the purposes of these rules shall be September 30, 2007. FIIs are also not permitted to issue, subscribe for or purchase any ODI’s, directly or indirectly, to or from, Indian residents or NRIs.

Accordingly so long as any company satisfies the eligibility criteria set forth above may be able to invest in P-Notes issued by an FII”.

Subject to above sub-clause if the Company has already invested in P-Notes with any other FII/Sub-account prior to entering this Agreement with the FII, the Company hereby irrevocably and unconditionally declares and confirms that it has fully complied with all of SEBI’s Regulations and Guidelines on ODI’s/ P-Notes applicable to it and the subscription to ODI and issuance of P-Notes with that other FII/Sub-account.

If Sub-clause 3.15 is applicable to the Company, the Company shall be under an obligation to inform the FII of such prior subscription to ODI and /or issuance of P-Notes and provide in writing all material details in relation thereof to the FII, and any failure or omission to do so shall constitute a material breach of this Agreement, following which the FII shall immediately terminate this Agreement.