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Simple Intercompany Loan Agreement for the United Kingdom

Simple Intercompany Loan Agreement Template for England and Wales

A Simple Intercompany Loan Agreement is a legally binding document governed by the laws of England and Wales that establishes the terms and conditions for a loan between two companies within the same corporate group. It sets out the fundamental elements of the lending arrangement, including the loan amount, interest rate, repayment terms, and any security arrangements. The agreement ensures compliance with UK company law while maintaining the flexibility needed for group financing arrangements.

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Simple Intercompany Loan Agreement

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What is a Simple Intercompany Loan Agreement?

The Simple Intercompany Loan Agreement Template is designed for use when companies within the same corporate group need to establish formal lending arrangements. It provides a structured framework for documenting loans between related entities, ensuring compliance with English and Welsh law while maintaining commercial flexibility. This template is particularly useful for group treasury operations, internal financing arrangements, and maintaining clear audit trails for intercompany transactions. It includes essential provisions for loan terms, interest calculations, repayment schedules, and default scenarios.

What sections should be included in a Simple Intercompany Loan Agreement?

1. Parties: Identification of lender and borrower companies, including registration details

2. Background: Context of the loan and relationship between the companies

3. Definitions: Key terms used throughout the agreement

4. Loan Amount and Purpose: Specification of loan amount and intended use

5. Interest: Interest rate, calculation method, and payment terms

6. Repayment Terms: Schedule and method of repayment

7. Representations and Warranties: Standard company representations regarding capacity and authority

8. Events of Default: Circumstances constituting default and consequences

9. Governing Law: Specification of English and Welsh law as governing law

What sections are optional to include in a Simple Intercompany Loan Agreement?

1. Security: Details of any security or guarantees - include when loan is secured

2. Tax Provisions: Handling of withholding tax and other tax matters - include for cross-border loans or when tax implications are significant

3. Subordination: Provisions regarding priority of debt - include when multiple creditors are involved

4. Change of Control: Provisions for change in company ownership - include when group structure might change

What schedules should be included in a Simple Intercompany Loan Agreement?

1. Repayment Schedule: Detailed breakdown of repayment dates and amounts

2. Form of Drawdown Notice: Template for requesting loan disbursements

3. Security Documents: Details of any security arrangements if applicable

4. Group Structure Chart: Diagram showing relationship between parties if complex

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

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions




















Clauses




















Industries

Companies Act 2006: Primary legislation governing company operations, particularly focusing on directors' duties and intra-group transactions in the context of intercompany loans

Consumer Credit Act 1974: While primarily for consumer protection, needs consideration to ensure the intercompany agreement doesn't inadvertently fall within its scope

Financial Services and Markets Act 2000: Regulates financial activities and services, relevant for ensuring compliance with regulated activities provisions

Corporation Tax Act 2009: Governs the tax treatment of loan relationships between companies, including interest deductibility and other tax implications

Income Tax Act 2007: Relevant for the tax treatment of interest payments made under the loan agreement

Transfer Pricing Legislation: Ensures that intercompany loans, especially cross-border ones, are made on arm's length terms

Thin Capitalization Rules: Rules governing the debt-to-equity ratio in companies and limiting excessive interest deductions

FCA Regulations: Financial Conduct Authority regulations that may impact intercompany financing arrangements

PRA Requirements: Prudential Regulation Authority requirements that may apply to regulated entities engaging in intercompany loans

Contract Law Principles: Common law fundamentals including offer, acceptance, consideration, and intention to create legal relations

Ultra Vires Doctrine: Legal principle concerning whether a company has the power to enter into the specific loan transaction

Corporate Benefit Rules: Legal requirements ensuring the loan agreement provides benefit to each participating company

Insolvency Act 1986: Legislation concerning transactions at an undervalue and preference, particularly relevant in group company contexts

Companies (Cross-Border Mergers) Regulations 2007: Regulations affecting intercompany transactions involving cross-border elements

Modern Slavery Act 2015: Legislation requiring group-wide compliance in corporate governance and transparency

EU Retained Law: Post-Brexit EU laws retained in UK legislation that may affect intercompany financing arrangements

International Accounting Standards: Standards governing how intercompany loans should be recorded and reported in financial statements

OECD Guidelines: International guidelines on transfer pricing and intercompany transactions that influence loan pricing and terms

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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