Cash Pooling Agreement Definition

Setting up a cash pooling system may require some effort, depending on the number of companies involved and the involvement of foreign companies. It is recommended to conduct a thorough preparatory phase, the first stage of which is an analysis of the group: what are its structures, which companies are suitable as participants and what is their legal framework (especially for foreign companies)? Before implementation, the group`s units will be able to be informed through workshops on the implementation and operation of the planned cash pooling system. Issues of liability and liability are of particular interest. Security is offered by a written contract that must cover, among other things, the following contents: other company law problems could arise: a capital contribution by the cash manager as a partner of a group company can be interpreted as a hidden contribution. This is the case when a business loan is repaid in the cash pool. In other words, if that group company were to go bankrupt, the manager of the treasury pool, as a partner, would have to pay the contribution again. In order to avoid tax issues or legal consequences, experts recommend respecting certain basic rules and civil restrictions. It is important to respect the do-it-see principle when designing a cash pool. For assets and liabilities, there is no mandatory transfer pricing in internal liquidity clearing.

However, the rules adopted by the group must withstand an under-comparison. This means that financial assets and loans must be offered under normal market conditions, as would be the case for independent businesses. In case of doubt, the agreed bank interest rate for the main account should serve as a guideline. Below is a guide on how to notify instruments lent by AnaCredit banks to connected companies in a cash pooling system. We give examples and an explanation of the logic of the AnaCredit report. A group consists of a holding company and three companies. Their bank accounts change daily due to their activities. Strong fluctuations in turnover are not uncommon in the market in which the group operates. . . .

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