Line Of Credit Promissory Note for United Arab Emirates

Line Of Credit Promissory Note Template for United Arab Emirates

A Line of Credit Promissory Note is a legally binding financial instrument used in the United Arab Emirates that evidences a borrower's promise to repay drawn amounts under a revolving credit facility. This document, governed by UAE Federal Law No. 18 of 1993 (Commercial Transactions Law) and related banking regulations, establishes the terms of a flexible borrowing arrangement where the borrower can repeatedly draw funds up to a predetermined limit. It includes essential elements such as the maximum credit amount, interest rates, repayment terms, and default provisions, while ensuring compliance with both UAE civil law and Islamic finance principles where applicable.

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What is a Line Of Credit Promissory Note?

The Line of Credit Promissory Note is a crucial document in UAE commercial and banking practice, used to establish and evidence revolving credit arrangements between lenders and borrowers. This instrument combines the legal characteristics of a promissory note under UAE Federal Law No. 18 of 1993 with the flexibility of a revolving credit facility, allowing borrowers to draw and repay funds multiple times up to an approved limit. The document is particularly valuable for businesses requiring flexible access to working capital or individuals needing ongoing credit facilities. It must comply with UAE banking regulations, including Central Bank guidelines, and can be structured to accommodate both conventional and Islamic finance principles. The note typically includes comprehensive details about credit limits, draw-down procedures, interest/profit rates, repayment terms, and security arrangements.

What sections should be included in a Line Of Credit Promissory Note?

1. Date and Place of Execution: Specifies when and where the promissory note is executed, which is crucial for enforceability under UAE law

2. Maker Information: Full legal name, address, and identification details of the person/entity issuing the promissory note

3. Payee Information: Full legal name and address of the financial institution or entity to whom the note is payable

4. Principal Amount: Maximum credit limit and the words 'Line of Credit Promissory Note' clearly stated

5. Promise to Pay: Unconditional promise to pay the drawn amount plus interest and charges

6. Interest Rate: Clearly stated interest rate, calculation method, and payment terms

7. Payment Terms: Repayment schedule, minimum payments, and terms of revolving credit

8. Default Provisions: Consequences of default and acceleration clauses

9. Governing Law: Explicit statement that UAE law governs the promissory note

What sections are optional to include in a Line Of Credit Promissory Note?

1. Security Details: Include when the note is secured by collateral or guarantees

2. Islamic Finance Compliance: Required when the line of credit needs to be Sharia-compliant

3. Cross-Default Provisions: Include when the note is part of a larger financing arrangement

4. Currency Provisions: Include when the credit line can be drawn in multiple currencies

5. Joint and Several Liability: Include when there are multiple makers of the note

6. Draw Down Procedures: Include when specific procedures for accessing the credit line need to be documented

What schedules should be included in a Line Of Credit Promissory Note?

1. Draw Down Schedule: Record of credit line utilization and current outstanding balance

2. Payment Schedule: Schedule of minimum payments and payment history

3. Security Details Schedule: Details of any collateral or security provided

4. Fee Schedule: Breakdown of applicable fees, charges, and commission rates

5. Authorized Signatories: List of persons authorized to draw on the credit line

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Genie AI

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking and Financial Services

Real Estate

Construction

Manufacturing

Trading and Distribution

Retail

Healthcare

Hospitality

Technology

Professional Services

Import/Export

Small and Medium Enterprises

Relevant Teams

Legal

Finance

Treasury

Credit

Risk Management

Compliance

Islamic Banking

Corporate Banking

Business Development

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Credit Manager

Legal Counsel

Corporate Banker

Relationship Manager

Risk Manager

Compliance Officer

Financial Controller

Account Manager

Credit Analyst

Islamic Banking Officer

Business Development Manager

Company Secretary

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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