1. Managing Stake Holder Expectations in a Lease Ronald Ssonko Head, Asset Based Finance KCB Bank Uganda rssonko@ug.kcbbankgroup.com

2. Key definition of a lease and the respective stakeholders In its simplest form, a lease is a contract between an owner of equipment/vehicle(s) (the lessor) and another party (the lessee) giving the lessee possession and use of specific asset in return for payment of specified rentals over an agreed period. The lessee selects the equipment and the lessor purchases it for the former’s use from the supplier.

3. 1.Understand the expectations of Suppliers from Lessees and Lessors Simple definition; The Supplier in asset finance terms is the vendor of assets (vehicles or equipment that form the subject of the Lessee and Lessor relationship (lender/borrower relationship). These can be outright brand franchise dealers or vendors of pre-owned assets.

4. Supplier expectations of Lessees (borrowers); Choice and purchase of their (supplier’s) assets with pre- arranged financing from Lessors (financial institutions) Adherence to Lessors’ purchase order requirements to facilitate timely payment for financed assets. Adherence to warranty certificate conditions to ensure seamless service and maintenance programs for the financed assets. This involves timely feedback on performance of the assets as well.

5. Supplier expectations of Lessors; Relationship building enablers (industry information, client references, joint marketing, etcetera) Timely and effective responses to prospective business leads (calls and credit processing) Timely payments for all financed assets

6. 2. Expectations of Lessees from the Lessor and the supplier Simple definition; The Lessee is the person renting an asset under a written lease from the owner (lessor). He/she/it is the tenant and the lessor is the landlord in simple terms. The Lessee may, unless, restrained by the covenants in the lease, either assign it, or underlet the asset(s). By an assignment of the lease is meant the transfer of all the Lessee's interest in the estate to another person; on the contrary, an underletting is but a partial transfer of the asset(s) leased, the lessee retaining a reversion to himself.

7. Lessee expectations of the Lessor; Trusted advisor and financial partner The Lessor makes available the finances (full or partial) needed to purchase the Lessee’s desired business or personal assets, subject to a successful credit appraisal. The Lessor must facilitate the Lessee with the right to economic utilization of the asset(s) leased for the term mentioned in the lease agreement, and to employ them for the purpose agreed upon.

8. Lessee expectations of the supplier; Avail quality assets that conform to the business needs of the market (requirement of deep research and development on the part of the supplier) Affordable, reliable and quality service, spares and maintenance of the financed assets Warranty availability coupled with eligibility compliance to the same Advice on financing options and available industry players.

9. 3. Expectations of Lessors from Lessees and Suppliers Simple definition; The Lessor is the owner of the leased asset(s) who rents it to a lessee pursuant to a written lease. Thus, he/she/it is the landlord and the lessee is the tenant.

10. The expectations/duties of the lessee are numerous; First, he is bound to fulfill all express covenants he has entered into in relation to the asset(s) leased. Secondly, he is required to fulfill all implied covenants, which the relation of lessee imposes upon him towards the lessor. He is required to use the asset(s) in a tenant-like and proper manner; to take reasonable care of it and to restore it at the end of his term, subject only to the deterioration produced by ordinary wear and the reasonable use for which it was demised. Although he is not bound, in the absence of an express covenant, to rebuild in case of destruction by fire or other accident, yet he must keep the asset in a usable state if he received it in good order. The lessee remains chargeable, after an assignment of his term, as before, unless the lessor has accepted the assignee.

11. Supplier duties/obligations to the Lessor; All assets to be supplied are invoiced by the supplier and any invoice issued will be in respect of the Dealer’s own unencumbered stock and will correctly describe the same; Upon delivery of an asset to the Lessor’s Customer, the Lessor will be the owner of the goods and have valid and absolute title thereto, and no person will have any basis for asserting the contrary; The goods will not have been built up of components of different units and will not have any latent defect, whether known to the Dealer or not, and all goods will be fit for the purposes for which the Customer acquires the same; There should be complete delivery and acceptance take of the goods by the Customer before the Dealer accepts/demands payment from the Lessor.

12. Cont’d If the goods are vehicles, they are road worthy and if the goods are not vehicles, that they are in good working order; If the goods are ordinarily equipped with odometers or have hour meters that the readings have not been reduced in any way before or after acquisition by the Dealer; Any credit information supplied by the Dealer to the Lessor is, to the best of the Dealer’s knowledge, true and correct and that the Dealer has not withheld any information relating to the credit worthiness of the Customer; Where documentation has been presented to the Customer for signature by the Dealer’s staff on behalf of the Lessor, signatories’ and witnesses’ signatures have been properly identified and all other procedures and requirements have been complied with as per the guidelines supplied by the Lessor from time to time.

13. 4. Striking the balance in expectations; The Lessee, Lessor and Supplier are essentially in a threesome marriage with a common interest being financial gain. The Lessee to attain the required business or personal assets to further their business interests; the Lessor to firstly on board new business and the income that comes from the advanced credit facility and the supplier to make a sale and realize a profit/income on the transaction.

14. Common pre-requisites for all stakeholders achieve the desired common objective; High levels of integrity Timely execution of requirements Timely and seamless flow of communication Adherence to best-practice industry business transaction processes

15. Q & A THANK YOU!!