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Loan Pledge Agreement for United Arab Emirates

Loan Pledge Agreement Template for United Arab Emirates

A comprehensive legal document governed by UAE law that establishes both a loan arrangement and a security interest in the form of a pledge over specific assets. The agreement details the loan terms, identifies the pledged assets, and sets out the rights and obligations of the parties in accordance with UAE Civil Code and Federal Pledge Law requirements. It includes provisions for pledge creation, perfection requirements, enforcement mechanisms, and complies with UAE Central Bank regulations where applicable. The document serves as both a lending instrument and a security document, providing the lender with secured rights over the pledged assets in case of default.

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What is a Loan Pledge Agreement?

The Loan Pledge Agreement is a critical document in secured lending transactions within the UAE legal framework. It is used when a lender requires security over specific assets while extending credit to a borrower. The agreement combines elements of both a loan agreement and a security document, structured to comply with UAE Federal Law No. 5 of 1985 (Civil Code) and Federal Law No. 20 of 2016 (Pledge Law). The document is particularly important in commercial financing where lenders need enforceable security interests over movable or immovable assets. The agreement must be carefully drafted to ensure compliance with UAE Central Bank regulations and to maintain enforceability in UAE courts. It typically includes detailed provisions about the loan terms, comprehensive descriptions of pledged assets, perfection requirements, and enforcement mechanisms.

What sections should be included in a Loan Pledge Agreement?

1. Parties: Identification of the Lender, Borrower, and any guarantors or third-party pledgors

2. Background: Context of the loan arrangement and purpose of the pledge agreement

3. Definitions: Key terms used throughout the agreement, including specific UAE law terminology

4. Loan Terms: Details of the loan amount, interest rate, repayment schedule, and other financing terms

5. Pledge Creation: Express creation of the pledge over the specified assets in compliance with UAE law

6. Pledged Assets: Detailed description and identification of the assets being pledged as security

7. Perfection Requirements: Steps required to perfect the pledge under UAE law, including registration requirements

8. Representations and Warranties: Statements by the pledgor regarding ownership, authority, and status of pledged assets

9. Covenants: Ongoing obligations of the pledgor regarding maintenance and preservation of pledged assets

10. Events of Default: Circumstances constituting default under the agreement

11. Enforcement Rights: Lender's rights and remedies upon default, compliant with UAE enforcement procedures

12. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction of UAE courts

What sections are optional to include in a Loan Pledge Agreement?

1. Insurance: Requirements for insurance of pledged assets, used when assets require specific insurance coverage

2. Security Agent: Provisions regarding appointment and authority of security agent, used in syndicated lending

3. Further Assurance: Additional actions required to perfect or maintain the pledge, used for complex asset types

4. Power of Attorney: Appointment of lender as attorney for enforcement purposes, used when UAE law permits

5. Tax Provisions: Allocation of tax responsibilities, used when significant tax implications exist

6. Currency Provisions: Terms for handling multiple currencies, used in cross-border transactions

What schedules should be included in a Loan Pledge Agreement?

1. Schedule 1 - Loan Terms: Detailed breakdown of loan amount, interest calculations, and repayment schedule

2. Schedule 2 - Pledged Assets: Comprehensive description and identification details of all pledged assets

3. Schedule 3 - Perfection Requirements: Specific steps and documentation required for pledge perfection

4. Schedule 4 - Form of Notice: Template notices required for pledge registration or third-party notification

5. Schedule 5 - Conditions Precedent: List of documents and conditions required before agreement effectiveness

6. Appendix A - Registration Forms: Forms required for registering the pledge with relevant UAE authorities

7. Appendix B - Valuation Report: Independent valuation of pledged assets if required

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Genie AI

Document Type

Financing Agreement

Cost

Free to use
Relevant legal definitions



































Clauses




























Relevant Industries

Banking & Financial Services

Real Estate & Construction

Manufacturing & Industrial

Trading & Commercial

Healthcare

Hospitality & Tourism

Technology & Communications

Energy & Resources

Transport & Logistics

Retail & Consumer Goods

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Operations

Corporate Secretariat

Business Development

Commercial

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Credit Manager

Risk Manager

Treasury Manager

Compliance Officer

Security Trustee

Loan Officer

Commercial Director

Business Development Manager

Company Secretary

Operations Director

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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