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.

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