Cash Pool Agreement Template

Cash Pool Agreement Template

Cash-pooling is usually used whenever a group wants to pool its cash to reduce costs. These savings are achieved either by reducing borrowing costs or by increasing interest income. Debts and debts are settled exclusively internally: companies that deposit the money are entitled to the repayment of a basic account, while the borrower has a repayment obligation. External funds (for example. B bank loans) are used only if the group`s internal liquidity balance is not sufficient to cover capital requirements. The following graph shows a possible structure of fictitious cash pooling, in which the parent company and other entities of the group have independent individual accounts (hellorange) and are responsible for the debts incurred, while the fictitious account (light blue) is only the internal account of the group and has no legal status in this case. In the case of virtual or inadequate cash pooling, balances between the holding company with a master account and the cash pool participants are calculated only on a fictitious basis. This virtual account determines the net position of the pool and is the basis for calculating the interest payable or billed by the bank operating the cash pool. This interest is then distributed among the participants according to the conditions set out in the agreement reached by the pool members.

Cash pooling is a technique used to balance funds within a group of companies. The main advantage of this system is to centralize money to get better interest rates. The main account must be declared where the contract implies a credit limit for the group of companies, regardless of whether the funds made available to the bank have been deducted or not. An instrument is subject to notification when the creditor of the observed agent allows the debtor to draw funds after the conclusion of a legally binding agreement with the debtor. In cases where this is not the case, i.e. the bank does not provide financing, but provides only a zero credit account, these accounts should not be reported to AnaCredit, even if they are served by AnaCredit banks. Therefore, to illustrate the declaration of extended credits by agents observed to counterparties related in a cash pooling system, two major cases of physical and fictitious cash pooling are distinguished. [3] With respect to credit lines as part of a cash pool, the reports to AnaCredit follow the general guidelines, in particular the guidelines on multi-debtor/multi-product structures. This is because the credit facility is generally available to several debtors and the credit limit structure can cover several levels and encompass different types of instruments. See Section 3 of Part III of the Report Manual, which deals specifically with instruments under a multi-debtor/product structure. However, regardless of the type of cash pool, only balances on cash pooling accounts managed by the observed agent are subject to the AnaCredit message.

The liability of one or more debtors for balances depends on the provisions of the legally binding agreement between the bank and the cash pool participants. It defines participants who are unconditionally required, vis-à-vis the observed representative, to make refunds arising from the cash pool contract; In order for cash-pooling to comply with the law and fair, the following rules must be respected: in particular, the internal account of the group (light blue) is not an instrument within the meaning of Article 1, paragraph 23, of the AnaCredit regulation and is therefore not subject to AnaCredit`s reports. In the meantime, individual accounts, each reflecting the contractual relationship between the creditor and the debtor, are instruments submitted to the AnaCredit report.

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