Simple Intercompany Loan Agreement Template for England and Wales

When your company needs to lend money to or borrow from another company within your corporate group, you need a properly structured intercompany loan agreement. This legal document creates a formal framework for internal lending arrangements while ensuring compliance with England and Wales corporate law requirements.

When do you need this document?

You need an intercompany loan agreement whenever companies within your group structure require formal lending arrangements. This includes situations where a parent company provides working capital to subsidiaries, when profitable group companies lend to those requiring investment, or where centralised treasury functions distribute funds across the organisation. The document is also essential when external auditors require documented evidence of intercompany transactions, when tax authorities need clear records of loan relationships for transfer pricing purposes, or when you're preparing for potential refinancing or sale transactions that require transparent intercompany arrangements.

Key legal considerations

Your intercompany loan agreement must address several critical legal areas to ensure enforceability and compliance. Interest rates must reflect arm's length pricing to satisfy transfer pricing regulations and avoid tax complications. The agreement should include clear default provisions and security arrangements where appropriate, while ensuring directors comply with their fiduciary duties under the Companies Act 2006. You must consider whether the transaction requires board approval or shareholder consent, particularly for substantial property transactions or conflicts of interest. The document should specify governing law, jurisdiction for disputes, and include appropriate representations and warranties regarding each company's capacity to enter the agreement.

Legal requirements in England and Wales

Under England and Wales law, your intercompany loan agreement must comply with the Companies Act 2006, particularly regarding directors' duties and substantial property transactions. The agreement must not breach financial assistance prohibitions when dealing with holding company relationships. You need to ensure compliance with the Consumer Credit Act 1974 exemptions for business lending and avoid inadvertently creating regulated activities under the Financial Services and Markets Act 2000. Corporation Tax Act 2009 provisions on loan relationships affect the tax treatment of interest payments and must be reflected in your documentation. The agreement should also consider Companies House filing requirements for charges or security interests, and ensure proper corporate authorisation through board resolutions or other governance processes as required by your company's articles of association.