Loan Note Agreement for Australia

Loan Note Agreement Template for Australia

An Australian-law governed Loan Note Agreement is a formal debt instrument that documents the terms and conditions under which an entity (the Issuer) issues debt securities to investors (Note Holders). The agreement comprehensively sets out the commercial terms of the notes, including interest rates, repayment terms, security arrangements (if any), and the rights and obligations of all parties involved. It ensures compliance with Australian corporate and securities laws while providing a framework for the issuance, maintenance, and redemption of the debt instruments.

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What is a Loan Note Agreement?

A Loan Note Agreement is a crucial financing document used when an entity wishes to raise debt funding through the issuance of notes, particularly common in the Australian market for both private and public offerings. This agreement type is typically employed when companies seek alternative funding sources to traditional bank loans, offering more flexibility in terms of structure and potential transferability. The document comprehensively covers the mechanics of the note issuance, subscription process, interest calculations, repayment terms, and various protections for both issuers and investors. Under Australian law, these agreements must comply with the Corporations Act 2001 (Cth) and relevant ASIC regulations, particularly regarding disclosure requirements and, where applicable, security registration under the Personal Property Securities Act 2009 (Cth). The agreement can be structured to accommodate various commercial requirements, from simple fixed-rate notes to more complex convertible or secured instruments.

What sections should be included in a Loan Note Agreement?

1. Parties: Identifies and defines the Issuer, Note Holder(s), and any other relevant parties such as a Security Trustee

2. Background: Sets out the context and purpose of the loan note issuance

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Issue and Status of Notes: Details the terms of note issuance, face value, and ranking of notes

5. Subscription and Payment: Outlines the subscription process and payment terms for the notes

6. Interest: Specifies interest rate, calculation method, and payment dates

7. Repayment and Redemption: Details the terms for repayment, early redemption rights, and maturity

8. Representations and Warranties: Sets out the representations and warranties given by the Issuer

9. Undertakings: Specifies positive and negative covenants of the Issuer

10. Events of Default: Lists circumstances constituting default and consequences

11. Notices: Specifies how formal communications between parties should be made

12. General Provisions: Contains standard boilerplate clauses including governing law, jurisdiction, and amendments

13. Execution: Formal execution blocks for all parties

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

1. Security: Required if the notes are secured against any assets of the Issuer

2. Guarantee: Include if there are any guarantors for the loan notes

3. Transfer and Assignment: Detailed provisions for transferability if notes are intended to be transferable

4. Note Holder Meetings: Required if there are multiple note holders and collective decision-making processes

5. Conversion Rights: Include if notes are convertible into shares or other securities

6. Subordination: Required if the notes are subordinated to other debt

7. Tax Provisions: Detailed tax clauses if specific tax arrangements apply

8. Register of Note Holders: Required if multiple note holders need to be registered

9. Appointment of Agents: Include if paying agents, calculation agents, or trustees are appointed

What schedules should be included in a Loan Note Agreement?

1. Note Certificate Terms: Form and terms of the physical note certificates if issued

2. Calculation Methods: Detailed formulae for interest calculations, conversion ratios, or other mathematical calculations

3. Form of Transfer: Standard form for transferring notes between holders

4. Security Details: Details of any security granted, including asset descriptions and registration requirements

5. Conditions Precedent: List of conditions that must be satisfied before notes are issued

6. Fee Schedule: Details of any fees payable including trustee fees, agent fees

7. Meeting Procedures: Procedures for note holder meetings and voting requirements

8. Form of Notice: Standard forms for various notices required under the agreement

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

Jurisdiction

Australia

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Financial Services

Banking

Real Estate

Infrastructure

Mining

Technology

Manufacturing

Energy

Healthcare

Telecommunications

Agriculture

Retail

Construction

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Development

Investment

Company Secretariat

Credit

Capital Markets

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Legal Counsel

Investment Manager

Fund Manager

Compliance Officer

Company Secretary

Financial Controller

Risk Manager

Corporate Finance Manager

Investment Banker

Credit Analyst

Portfolio Manager

Debt Capital Markets 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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