Legal Structure for the Lease-Purchase of Agricultural Land Lina Nemchenko

Partner

Andriy Nikiforov

Senior Associate

20 July 2012

2

Introduction to the Lease-Purchase Concept and why Baker & McKenzie

Transaction Agreements

Settlement Option 1: Special Regime Current Account Documenting Special Regime Current Account Flow of Funds using Special Regime Current Account

Settlement Option 2: Letter of Credit Documenting LC Structure Flow of Funds under LC Structure

Documents Documents Custody Transfer of Documents

Road Map

Introduction

What is a Land Lease-Purchase?

Why Baker & McKenzie?

3

Transaction Agreements

4

agreements 1, 3 and 5

BuyerBuyer Bank/CustodianBank/Custodian

SellerSeller

agreements 2,3,4 and 5

agreements 3 and 5

1 - Lease Purchase Agreement OR

1A - Lease Agreement and

1B - Purchase Agreement

2 - Current Account Agreement 

 

 

3 - Funds Transfer Agreement

4 - Documents Custody Agreement

5 - Document Services Agreement 

 

 

Settlement Option 1: Special Regime Current Account - Documents

5

BuyerBuyer BankBank

SellerSeller

agreements 1 and 2

agreement 2agreement 2

1 - Current Account Agreement

 2 - Funds Transfer Agreement 

 

 

Settlement Option 1: Special Regime Current Account - Flow of Funds

6

BuyerBuyer BankBank

SellerSeller

1 payments to current account

2a write-off of funds upon registration of Buyer's title to

the Land Plot

* LPA - Lease-Purchase Agreement/Land Sale and Purchase Agreement

 

 

2b release of funds in connection with

LPA* termination

Settlement Option 2: Letter of Credit -Documents

7

BuyerBuyer BankBank

SellerSeller

agreements 1 and 2

non-covered LC

1 - Loan Agreement

 2 - Agreement on Pledge of Bank Account 

application for LC

Settlement Option 2: Letter of Credit -Flow of Funds

8

BuyerBuyer BankBank

SellerSeller

2a payment under LC

2b release of funds upon termination of LC

1 payments to current account subject to pledge

Documents Custody

9

agreement 2

BuyerBuyer CustodianCustodian

SellerSeller

agreements 1 and 2

agreement 2

1 - Documents Custody Agreement

2 - Document Services Agreement 

 

 

Transfer of Documents

10

BuyerBuyer CustodianCustodian

SellerSeller

2 title documents

and custody receipt

3b return of state act

in connection with

termination of LPA*

1 state act

* LPA - Lease-Purchase Agreement/Land Sale and Purchase Agreement 

 

 

3a registration of

Buyer's title to

the Land Plot

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Questions?

Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm.

Thank you!