Intra-Group (On-demand) Loan Agreement
This Intra-Group (On-demand) Loan Agreement regulates the making of an on-demand loan from a parent company to one of its subsidiaries. It is suitable for use when a parent company lends money to a subsidiary it has complete knowledge of and control over, and wants to document the basic terms of the arrangement in a simple document so as to avoid any potential misunderstanding regarding the loan that may otherwise occur if there is no formal record beyond accounting entries.
This document is not at arm’s length and is repayable on demand. An on-demand loan means that the lender may require repayment of the loan at any time. A borrowing subsidiary will not usually require certainty as to the term of the loan and the lender likewise can remove the need for having security, events of default, covenants, representations and warranties as would be usual in a lending relationship between two unconnected parties. If the parties do require a specified term as well as greater conditionality attached to the loan, our Long Form Loan Agreement may be more suitable.
NOTE: that with any connected parties involved in transactions not at arm’s length, there may be tax issues that need to be considered. HMRC’s website will have further details.
This Intra-Group Loan Agreement contains the following clauses:
9. Assignment and Transfer
10. Remedies, Waivers, Amendments and Consents
12. Third Party Rights
14. Governing Law and Jurisdiction
NOTE: This document is not intended to be regulated by the Consumer Credit Act 1974 which requires that businesses that lend money to consumers must be licensed to do so by the OFT. This agreement is not intended for consumer purposes; trading without a licence is a criminal offence and can result in a fine and/or imprisonment.
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