Document background
The Shareholder Loan Note is a crucial financing instrument in Austrian corporate practice, typically utilized when a company requires additional funding and a shareholder is willing to provide it through a formal loan arrangement. This document is particularly relevant in scenarios where external financing may be less favorable or unavailable, or when maintaining greater control over the funding terms is desired. The agreement must carefully navigate Austrian corporate law requirements, particularly the Equity Replacement Act (EKEG) and subordination rules, while also considering tax implications and corporate governance aspects. The Shareholder Loan Note includes detailed provisions on interest, repayment terms, events of default, and potential conversion rights, providing a clear framework for both the lending shareholder and the borrowing company. It's especially important in private companies and family-owned businesses, where shareholder financing is a common funding source.
