Intercompany Revolving Loan Agreement Template for the United Arab Emirates

An Intercompany Revolving Loan Agreement is a specialized financial contract that allows related companies within a corporate group to establish flexible lending arrangements in the United Arab Emirates. This document creates a revolving credit facility where the borrower can draw down funds, repay them, and borrow again up to a predetermined limit, providing essential liquidity management for UAE-based corporate groups.

When do you need this document?

You need this agreement when establishing internal financing between group companies, such as when a parent company provides working capital to its subsidiaries, or when a group treasury company manages centralized funding across multiple operating entities. It's particularly valuable for multinational corporations with UAE operations that require flexible cash flow management, seasonal businesses needing variable funding, or holding companies supporting special purpose vehicles for specific projects. The revolving nature makes it ideal for ongoing operational needs rather than one-time capital investments.

Key legal considerations

The agreement must include precise terms for interest calculations, drawdown procedures, and repayment schedules to ensure enforceability under UAE law. You should carefully define the facility limit, purpose restrictions, and any security arrangements or guarantees. Key clauses should address default events, acceleration rights, and termination procedures. The document must establish proper corporate authorization requirements and ensure compliance with arm's length principles for related party transactions. Interest rates should align with market standards and Central Bank guidelines, while repayment terms must be commercially reasonable and properly documented.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 32 of 2021 (Commercial Companies Law), intercompany loans require proper board approval and disclosure as related party transactions. The agreement must comply with UAE Federal Law No. 5 of 1985 (Civil Code) for contract formation and validity, while adhering to commercial lending provisions under UAE Federal Law No. 18 of 1993 (Commercial Code). UAE Federal Decree-Law No. 14 of 2018 (Central Bank Law) governs interest rate regulations and lending operations, requiring compliance with monetary policy directives. Additionally, the arrangement must satisfy economic substance requirements and transfer pricing documentation under UAE Federal Decree-Law No. 33 of 2021 (Tax Procedures Law) to demonstrate legitimate business purposes and arm's length terms.