Share Loan Agreement for United Arab Emirates

Share Loan Agreement Template for United Arab Emirates

A Share Loan Agreement under UAE law is a sophisticated financial instrument that enables borrowers to obtain financing while using shares as collateral. The agreement is structured to comply with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and relevant UAE Central Bank regulations, incorporating necessary provisions for share pledges, enforcement mechanisms, and security arrangements. This document establishes the terms of the loan, including interest rates, repayment schedules, and default provisions, while ensuring that the security arrangement over shares meets UAE legal requirements for enforceability.

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What is a Share Loan Agreement?

The Share Loan Agreement is a critical document used in UAE financial transactions where shares are provided as security for a loan facility. This agreement type is commonly utilized in corporate financing, acquisition financing, and personal lending scenarios where shareholders seek to leverage their shareholding without immediate disposal. The document must comply with UAE Federal Law No. 32 of 2021 and UAE Central Bank regulations, particularly regarding security creation and enforcement. The Share Loan Agreement includes detailed provisions for loan terms, security arrangements, enforcement mechanisms, and regulatory compliance requirements specific to UAE jurisdiction. It is essential for transactions involving both listed and private company shares, requiring careful consideration of UAE commercial laws and regulatory framework.

What sections should be included in a Share Loan Agreement?

1. Parties: Identification of the Lender and Borrower with full legal names and addresses

2. Background: Context of the transaction, including details of the shares being loaned against and the underlying company

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Loan Amount and Purpose: Specification of the loan amount, purpose, and any conditions precedent to drawdown

5. Interest and Fees: Details of interest calculation, payment periods, and any associated fees

6. Security Arrangements: Description of the share pledge and other security mechanisms

7. Representations and Warranties: Standard and transaction-specific representations by both parties

8. Covenants: Positive and negative obligations of the Borrower during the loan period

9. Events of Default: Circumstances constituting default and consequences thereof

10. Rights and Remedies: Lender's rights upon default, including share enforcement mechanisms

11. Term and Termination: Duration of the agreement and termination provisions

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction for disputes

14. General Provisions: Standard boilerplate clauses including amendments, waivers, and severability

What sections are optional to include in a Share Loan Agreement?

1. Security Agent Provisions: Required when multiple lenders are involved and a security agent is appointed

2. Intercreditor Provisions: Needed when there are multiple lenders with different priorities

3. Share Transfer Restrictions: Additional provisions when specific transfer restrictions apply beyond standard UAE requirements

4. Tag-Along Rights: Optional provisions for other shareholders' rights in case of share enforcement

5. Shareholder Consent: Required when company's articles or shareholders' agreement require specific consents

6. Islamic Finance Provisions: Required when the loan needs to be Sharia-compliant

7. Tax Provisions: Detailed tax clauses when specific tax considerations apply

8. Currency Provisions: Required when loan and security involve multiple currencies

What schedules should be included in a Share Loan Agreement?

1. Schedule 1 - Share Details: Detailed description of the shares being pledged, including share certificates numbers and company details

2. Schedule 2 - Form of Transfer Instrument: Pre-agreed form for share transfer in case of enforcement

3. Schedule 3 - Conditions Precedent: List of required documents and conditions before loan drawdown

4. Schedule 4 - Repayment Schedule: Detailed schedule of repayment dates and amounts

5. Schedule 5 - Security Documents: Forms of required security documents including share pledge agreement

6. Schedule 6 - Notice of Pledge: Form of notice to be sent to the company regarding the share pledge

7. Appendix A - Corporate Authorizations: Required corporate approvals and board resolutions

8. Appendix B - Regulatory Approvals: Any required regulatory or government approvals

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

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking & Financial Services

Investment Banking

Private Equity

Corporate Finance

Asset Management

Family Offices

Professional Services

Real Estate

Healthcare

Technology

Manufacturing

Retail & Consumer

Energy & Resources

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Finance

Investment Banking

Credit

Securities

Corporate Secretariat

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Investment Manager

Credit Risk Manager

Compliance Officer

Company Secretary

Treasury Manager

Investment Banker

Private Equity Manager

Fund Manager

Corporate Finance Manager

Transaction Manager

Securities Officer

Relationship Manager

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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