Bank Personal Guarantee Template for the United Arab Emirates

When your company requires financing from a bank in the United Arab Emirates, you may need to provide a Bank Personal Guarantee as additional security. This legal document creates personal liability for an individual (typically a company director or shareholder) for the debts and obligations of a business entity, giving the bank direct recourse against your personal assets if the company defaults.

When do you need this document?

Banks in the UAE commonly require personal guarantees when extending credit facilities to companies, particularly for small and medium enterprises, new businesses without established credit history, or when the requested facility amount is substantial relative to the company's assets. You'll need this document when applying for business loans, overdraft facilities, trade financing, or letters of credit where the bank considers the company's security insufficient. The guarantee is also frequently required when restructuring existing debt arrangements or when company ownership changes and new directors join.

Key legal considerations

Under UAE law, personal guarantees are continuing, meaning they cover future debts and obligations until formally terminated. The guarantee typically covers the principal amount, interest, fees, costs, and expenses related to enforcement. You must carefully review the scope of guaranteed obligations, as they may extend beyond the original facility to include modifications, renewals, or additional advances. The document should specify whether the guarantee is joint and several if multiple guarantors are involved, and include clear termination provisions. Banks may require the guarantee to be unconditional and irrevocable, limiting your ability to raise defenses available to the principal debtor. Consider negotiating caps on liability amounts and time limitations where possible.

Legal requirements in the United Arab Emirates

UAE Federal Law No. 5 of 1985 (Civil Code) governs guarantee contracts, requiring clear identification of the guaranteed obligations and parties' consent. The guarantee must be in writing and properly executed according to UAE Federal Law No. 14 of 2018 (Central Bank Law) requirements for banking security documents. Notarization is often required to ensure enforceability, particularly for guarantees exceeding certain monetary thresholds. The document must comply with UAE Commercial Code provisions for commercial transactions and may require translation into Arabic for official registration. Banks must follow Central Bank of UAE guidelines regarding guarantee documentation, including specific disclosure requirements about the guarantor's liability. Proper legal capacity verification and spousal consent may be necessary depending on the guarantor's personal circumstances and applicable personal status law.