Inter Company Loan Agreement Template for the United Arab Emirates

An Inter Company Loan Agreement is a legal contract that governs lending arrangements between related companies within the same corporate group under United Arab Emirates law. You need this document to formalize internal financing while ensuring compliance with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and Central Bank regulations governing related party transactions.

When do you need this document?

You require an Inter Company Loan Agreement when your parent company provides financing to subsidiaries for operational needs, expansion projects, or working capital. This document is essential during corporate restructuring when transferring funds between group entities, or when establishing cash pooling arrangements across your UAE operations. You also need it when your holding company extends credit facilities to operating subsidiaries, particularly in free zones where specific documentation requirements apply. The agreement becomes crucial when implementing Sharia-compliant financing structures between Islamic and conventional group entities, ensuring proper segregation and compliance with both conventional and Islamic banking principles.

Key legal considerations

Your Inter Company Loan Agreement must clearly define the loan purpose, amount, and terms to satisfy UAE regulatory scrutiny of related party transactions. You need to establish market-rate interest terms to avoid transfer pricing issues and ensure the arrangement serves legitimate business purposes rather than tax avoidance. The document should include comprehensive security provisions, personal guarantees from directors or parent companies, and clear default remedies to protect the lender's interests. You must address currency considerations if lending involves multiple currencies, particularly regarding UAE dirham regulations and Central Bank approval requirements. Cross-default clauses linking the facility to other group borrowings provide additional protection, while covenants restrict the borrower's ability to take actions that could impair repayment capacity.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 32 of 2021, your Inter Company Loan Agreement must comply with commercial companies legislation governing related party transactions and corporate governance requirements. The UAE Central Bank Law No. 14 of 2018 may require regulatory approval for certain lending arrangements, particularly those involving significant amounts or foreign currency transactions. You must ensure the agreement complies with UAE Civil Code provisions regarding contract formation, validity, and enforcement of contractual obligations. If any party is a foreign entity, UAE Federal Decree Law No. 19 of 2018 (Foreign Direct Investment Law) governs the arrangement and may impose additional compliance requirements. The document should be executed in Arabic or include certified Arabic translations for enforceability in UAE courts, with proper notarization and legalization procedures completed according to UAE Commercial Code requirements.