Credit Facility Agreement Template for the United Arab Emirates

A Credit Facility Agreement is a comprehensive legal document that establishes the terms and conditions under which a financial institution provides credit to a borrower in the United Arab Emirates. This agreement serves as the foundation for all lending relationships, whether involving term loans, revolving credit facilities, or specialized financing arrangements such as Islamic banking products.

When do you need this document?

You need a Credit Facility Agreement when your business requires external financing for operations, expansion, or specific projects. This document is essential when establishing a line of credit with UAE banks, securing project financing for construction or infrastructure development, or obtaining working capital facilities. The agreement is also required for syndicated lending arrangements where multiple financial institutions participate in a single facility, and for Islamic financing structures that comply with Sharia principles. Additionally, you'll need this document when refinancing existing debt or when lenders require formal documentation of credit terms to satisfy regulatory requirements.

Key legal considerations

Several critical legal elements must be carefully addressed in your Credit Facility Agreement. Interest rate provisions must comply with UAE Central Bank regulations and may need to accommodate both conventional and Islamic financing structures. Security arrangements require proper documentation and perfection under UAE law, including mortgages, pledges, and guarantees. The agreement must include comprehensive representations and warranties from the borrower regarding their financial condition and legal capacity. Covenants play a crucial role in protecting lender interests, including financial covenants, information covenants, and negative covenants restricting certain borrower actions. Default and enforcement provisions must align with UAE civil and commercial law procedures, while ensuring adequate remedies for the lender.

Legal requirements in United Arab Emirates

UAE law imposes specific requirements on Credit Facility Agreements that must be strictly followed. Under UAE Federal Law No. 18 of 2017 (UAE Central Bank Law), all credit facilities must comply with regulatory capital requirements and prudential regulations. The agreement must satisfy the contract formation requirements under UAE Federal Law No. 5 of 1985 (Civil Code), including proper offer, acceptance, and consideration. For corporate borrowers, compliance with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) is essential to ensure corporate authority and board resolutions. Security interests must be perfected according to UAE Federal Law No. 4 of 2020 (Security Law), particularly for real estate mortgages and movable asset pledges. Islamic financing facilities must additionally comply with Sharia principles and may require certification from recognized Sharia boards.