Director and Shareholder Loans
Building on our popular portfolio of loan and finance documents, this month we have updated our Directors’ Loan Agreement (Loan to a Company) and added a new Shareholder Loan Agreement (also for making a loan to a company) and a new template Drawdown Notice.
Directors and shareholders will often extend funds in the form of loans to the company they are either a director or shareholder of. This can be a cheaper and more convenient source of funding for the company. However in order to protect both parties, it is sensible to enter into a loan agreement so that the key terms of the lending are documented.
We have updated our Directors’ Loan Agreement to refresh and modernise it as well as including a drawdown notice within the body of the loan agreement to establish a useful mechanism for requesting when the loan is advanced. We have also produced a brand new shareholder version of this agreement, which whilst similar in substance to our Directors’ Loan Agreement, has important differences. In particular it includes more conditions precedent to the making of the loan, to add greater protection for a shareholder who may not have the same level of knowledge or access to information that a director making a loan to a company may have. Our new Drawdown Notice has also been included as a stand-alone document in order to be used with our other loan templates.
These new and updated templates will be useful for company directors, shareholders and administrators.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.