Co-Financing Agreements

Overview & Legal Definition

When multiple financiers jointly fund a single project or facility, the agreement becomes a precise balancing instrument among parties whose priorities may diverge upon default or distress. Critical Elements Risk and return allocation among financiers proportionate to each party’s share. Governance structure: who holds decision-making authority on default, and whether unanimity or majority is required. Agreed dispute resolution forum, whether the Committee for Resolution of Banking Disputes or arbitration. Shared security mechanisms and how enforcement proceeds are distributed among financiers upon realization.

Why Precise Drafting Matters Here Specifically

• 1The absence of a clear joint decision-making mechanism creates a legal vacuum exploited at the first disagreement among the financiers themselves — not only between financiers and the client. We have drafted multi-party co-financing agreements covering Shariah aspects (for Islamic finance structures) alongside regulatory requirements.

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