Loan Agreement: unsecured
Loan agreement for an unsecured loan of a fixed amount to a corporate borrower which is incorporated in England and Wales, to be drawn in a single advance and repayable either on a single repayment date or in instalments.
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When do I use this document?
- for an unsecured loan of a fixed amount to be drawn in a single advance
- for a borrower which is a company incorporated in England and Wales
- for a loan repayable on a single repayment date or in instalments
What are the key features?
- 21 clauses over 13 pages
- single advance of the total amount of the loan money to the borrower
- unsecured loan
- regular interest payments at either fixed or floating interest rate by reference to specified bank’s base rate of interest
- repayment terms, with repayment either on a single repayment date or in instalments
- undertakings from the borrower, including to provide information to the lender lending money (such as copies of its financial statements) and prohibitions on granting security and additional borrowings
- events of default, including if the borrower fails to repay the loan or interest and other borrower defaults, leading to the lender having the right to demand immediate repayment
What other documents are available?
For a form of secured loan agreement template, under which the borrower secures its obligations to the lender by granting a charge or other form of security, see
For forms of unsecured and secured facility agreements
If a director or shareholder of the borrower will personally guarantee the obligations of the borrower, see Guarantee: individual guarantor
When do I use this document?
- as a document to be delivered by a seller at closing of a Share Purchase Agreement
- when stamp duty is payable on the share transfer
- to enable the buyer to vote and exercise other share rights pending the registration of the share transfer
What are the key features?
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- suitable for an individual or corporate seller
- appointment of the buyer as the seller’s attorney
- grant of authority to the buyer to exercise all rights as the legal owner of the sale shares
- irrevocable appointment given by way of security
What else do I need to know?
Following the closing of a share sale transaction, the seller will remain the registered owner of the shares which have been sold until the buyer has paid the necessary stamp duty. This process can take a number of weeks. The transfer of the sale shares cannot be registered in the register of members of the target company until the stamp duty has been paid.
The buyer will want to be able to exercise all the rights as the owner of the sale shares notwithstanding that the seller remains the registered legal owner of the sale shares. To enable the buyer to do this, the buyer will usually require that the seller grants a power of attorney in favour of the buyer which enables the buyer to exercise the legal rights of ownership of the sale shares.
If a share transfer involves consideration exceeding £1,000, stamp duty will be payable to HMRC and HMRC will need to confirm that the stamp duty has been paid. This stamping process typically takes a few weeks and involves payment of the stamp duty and submission of the stock transfer by email to HMRC for HMRC to confirm the payment.
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Updated by a lawyer on 02/09/2024
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