Subsidiary Loan Agreement for the United Kingdom

Subsidiary Loan Agreement Template for England and Wales

A Subsidiary Loan Agreement is a legal contract governed by the laws of England and Wales that establishes the terms and conditions under which a parent company provides financing to its subsidiary. The agreement details the loan amount, interest rates, repayment terms, security arrangements (if any), and default provisions. It ensures compliance with UK company law requirements, particularly regarding financial assistance and directors' duties under the Companies Act 2006.

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What is a Subsidiary Loan Agreement?

The Subsidiary Loan Agreement is a crucial document for intra-group financing arrangements under English and Welsh law. It is commonly used when a parent company needs to provide funding to its subsidiary for working capital, expansion, or specific projects. The agreement must comply with UK regulatory requirements, including the Companies Act 2006 and Financial Services and Markets Act 2000. It typically includes detailed provisions on loan facilities, interest calculations, repayment terms, security arrangements, and events of default.

What sections should be included in a Subsidiary Loan Agreement?

1. Parties: Identification of lender (parent company) and borrower (subsidiary)

2. Background: Context of the loan and relationship between parties

3. Definitions: Key terms used throughout the agreement

4. Facility: Loan amount, purpose, and drawdown mechanisms

5. Interest: Interest rate, calculation method, and payment terms

6. Repayment: Repayment schedule and mechanisms

7. Representations and Warranties: Standard confirmations from borrower

8. Events of Default: Circumstances triggering default

9. Governing Law and Jurisdiction: Confirmation of applicable law and courts

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

1. Security: Details of any security provided - use when loan is secured

2. Subordination: Ranking of debt - use when multiple creditors exist

3. Tax Provisions: Treatment of withholding tax and other tax matters - use for cross-border loans

What schedules should be included in a Subsidiary Loan Agreement?

1. Form of Drawdown Notice: Template for requesting loan disbursements

2. Repayment Schedule: Detailed payment dates and amounts

3. Security Documents: Details of security arrangements if applicable

4. Conditions Precedent: List of documents and conditions required before drawdown

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

England and Wales

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Companies Act 2006: Primary legislation governing company operations, including directors' duties, financial assistance provisions, and related party transaction requirements

Financial Services and Markets Act 2000: Key legislation covering regulated activities provisions, financial promotion restrictions, and licensing requirements in financial services

Consumer Credit Act 1974: Legislation governing consumer credit and lending activities, relevant if the subsidiary has consumer-facing operations

Financial Services Act 2012: Updates to regulatory framework and financial conduct requirements in the financial services sector

FCA Regulations: Financial Conduct Authority regulations applicable to regulated financial activities and services

PRA Requirements: Prudential Regulation Authority requirements applicable to regulated financial institutions

Unfair Contract Terms Act 1977: Legislation governing the reasonableness and fairness of contractual terms

Late Payment of Commercial Debts (Interest) Act 1998: Legislation governing default interest provisions and late payment penalties in commercial transactions

Insolvency Act 1986: Legislation covering subordination provisions and security arrangements in case of insolvency

Money Laundering Regulations 2017: Regulations covering due diligence requirements and reporting obligations for financial transactions

Corporate Governance Code: Guidelines and requirements for corporate governance, particularly relevant for listed companies

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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