Overview of a Director’s/Shareholder’s Loan Agreement
What is a Director’s/Shareholder’s Loan Agreement?
A Director’s/Shareholder’s Loan Agreement is a loan agreement for a company to borrow money from its director or shareholder.
Contrary to a commercial loan agreement, a loan under a Director’s/Shareholder’s Loan Agreement can be interest free and repayable on demand.
Given the relationship between the borrower and the lender, a Director’s/Shareholder’s Loan Agreement does not contain extensive representations and warranties, nor any obligations or restrictions on the part of the borrower.
Key points included
- Principal amount;
- Interest rate (if any);
- Availability period; and
- Dates for repayment.
