Why use a facility agreement?

A facility agreement is an arrangement under which a lender agrees to provide one or more loans to a borrower for a period of time and up to specified maximum amount. A facility agreement may be unsecured or secured. The facility (if “committed, which means that the lender is committed to provide future loan advances to the borrower under the facility) will enable the borrower to borrow money (and start to pay interest on the amount advanced) when needed. In exchange for the commitment to lend money when requested, the lender is often paid a commitment fee equal to a percentage of the undrawn facility.

Facility Agreement: unsecured

Name: Loan facility agreement - Paper Rock Docs
SKU: FIN003.001
Price: 50.00 GBP
Availability: InStock

Facility agreement for an unsecured loan facility to a corporate borrower which is incorporated in England and Wales, to be available to be drawn during an availability period and repayable on a fixed repayment date.

for an unsecured loan facility to be available for drawing during an availability period
for a borrower which is a company incorporated in England and Wales

What are the key features?

23 clauses and two schedules over 14 pages
mechanism for the borrower to request advances, subject to satisfaction of conditions precedent
regular interest payments at either fixed or floating interest rate by reference to specified bank’s base rate of interest
repayment of all loans on a fixed repayment date, with borrower able to prepay in whole or in part
provision for an arrangement fee and facility commitment fee
undertakings from the borrower, including to provide information to the lender and prohibition on granting security and additional borrowings
events of default, leading to the lender having the right to stop further advances and demand immediate repayment

What other documents are available?

For a form of secured facility agreement, see

Facility Agreement: secured

For forms of unsecured and secured loan agreements, see

Description

When do I use this document?

where one or more shareholders wish to remove a director
where the Articles of Association do not include a simpler removal process
as special notice pursuant to the Companies Act 2006 to remove a director

Key features

special notice required to remove a director from office
including an ordinary resolution to remove a director, for use by either a single shareholder or multiple shareholders
alternative forms covering:
- removal of director only
- removal of director and appointment of replacement director

What else do I need to know?

Under section 168 of the Companies Act 2006, shareholders can remove a director by passing an ordinary resolution at a general meeting. This decision cannot be made by written resolution. The shareholder proposing the removal must give formal notice to the company. The Articles of Association cannot override this statutory process or change the notice periods required for the process.

Once the company receives special notice, the board must call a shareholder meeting. This meeting must take place at least 28 days after the notice is received. The director facing removal has the right to submit written representations, which the company must circulate to shareholders before the meeting.

The special notice may also propose appointing a new director to replace the one being removed.

In some companies, weighted voting rights can protect shareholder-directors being removed from office by granting them extra votes on removal resolutions. This is common in joint ventures, multi-shareholder businesses, or investor agreements where director rights need protection.

Being removed as a director does not affect employment rights, but it may lead to legal claims, such as wrongful dismissal. If the removed director is also a shareholder, they may claim unfair prejudice under the Companies Act 2006 – particularly in quasi-partnerships, where they expected to be involved in management. If the claim succeeds, the court may order other shareholders to buy their shares at fair value.

Explanatory Guides

As with all of our document templates, your purchase will include access to clear explanatory guidance on the document and its use.

£50.00 exc VAT

Updated by a lawyer on 04/09/2024

Updated By a lawyer on 01/05/2023

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Facility Agreement: unsecured