Cash Pooling Agreement Sec

While the group`s resources are allocated to the funds made available by the Bank (for example. B to determine the applicable interest rate), the reports are not settled by the Bank`s funds against funds from group entities. In other words, since only funds borrowed by the bank fall within the scope, the calculation of lines of credit not used by banks is not influenced by the amount of funds in the cash pool made available by cash pool participants. However, all funds of entities in the group are guarantees (i.e. cash guarantees) and must be reported to AnaCredit as protection of funds made available to the group by the bank. This corresponds to the requirement that AnaCredit`s protection be notified separately from the instruments. Cash pooling is always subject to a contract between the parties. It contains the conditions under which company balances are deducted from the root account. It determines, for example, the amount of interest paid by companies with negative balances within the cash pool to companies with credit balances. The dual role of the observed agent (the bank) who manages the cash pool: there are different categories of cash-pooling agreements, depending on the legal circumstances of the contract between the bank and the counterparty group. These include: to illustrate the declaration of extended credits by agents observed to counterparties linked to a cash pooling system, there are two major cases of physical and fictitious cash pooling. [3] Since the bank`s pooling is achieved by creating a fictitious high-level account that virtually consolidates the positions of pool participants, but does not present itself as a resource or obligation of the bank, the top account of fiction is not subject to notification to AnaCredit. Whether the credit facility associated with a cash pool is a single instrument and what considerations must be declared depends (i) on the legally binding agreement between the Bank and the cash pool participants, (ii) the format in which cash pooling is implemented and (iii) the cash pooling contract between the participants , which defines their reciprocal rights and obligations.

In the case of actual or physical cash pooling, the balance of each participating entity is transferred to a „master account.“ This account is usually managed by a holding company. If a cash pool company needs cash, it can receive it from the master account. The balance of the main account is usually covered by credits. In the event of a claim against the cash pool, the holding company is liable. On the other hand, for companies that are still considering joining a cash-pooling agreement, they may consider seeking a positive tax decision from the tax authorities following a complaint to the Administrative Court. The choice of this strategy could be particularly advantageous, given the proposed changes to the income tax provisions, with respect to the strengthening of low-cap standards, which provide for a change in debt and capital ratios from 3 to 1 to 1 in 2015 after the expected date in early 2015.