The Shareholder Loan Note is commonly used in Hong Kong when a company requires additional funding and opts to obtain it from existing shareholders rather than external lenders. This approach often provides more flexible terms and faster execution compared to traditional bank financing. The document is particularly valuable for growing companies, restructuring situations, or when conventional financing is not readily available. It must comply with Hong Kong's Companies Ordinance, securities regulations, and tax laws, while potentially including provisions for security, subordination, or conversion rights. The note typically contains detailed terms regarding interest, repayment, events of default, and enforcement mechanisms, providing clarity and protection for both the lending shareholder and the borrowing company.
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1. Parties: Identification of the Lender (Shareholder) and Borrower (Company)
2. Background: Context of the loan, relationship between parties, and purpose of the funding
3. Definitions: Key terms used throughout the document including 'Loan Amount', 'Interest Rate', 'Repayment Date', etc.
4. Loan Amount and Drawdown: Specification of the principal amount and procedures for drawdown
5. Interest: Interest rate, calculation method, and payment terms
6. Repayment: Terms and schedule for repayment of principal and interest
7. Representations and Warranties: Standard company representations regarding capacity and authority
8. Events of Default: Circumstances constituting default and consequences
9. Notice Provisions: Methods and addresses for serving notices
10. Governing Law and Jurisdiction: Confirmation of Hong Kong law and jurisdiction
1. Security: Include when the loan is secured against company assets
2. Subordination: Include when the loan is subordinated to other company debt
3. Conversion Rights: Include if the loan note can be converted into shares
4. Tax Gross-Up: Include if tax implications need to be addressed explicitly
5. Assignment and Transfer: Include if the loan note may be transferred or assigned
6. Early Repayment: Include if early repayment options are allowed
7. Information Covenants: Include if regular financial information is to be provided to lender
1. Drawdown Notice: Form of notice for requesting loan disbursement
2. Repayment Schedule: Detailed schedule of repayment dates and amounts if installment-based
3. Security Details: Description of any assets provided as security
4. Conversion Terms: Detailed terms and calculations for conversion rights if applicable
5. Form of Note Certificate: Template for the physical loan note certificate if required
Relevant legal definitions
Advance
Business Day
Company
Completion Date
Default Interest Rate
Default Notice
Drawdown Date
Drawdown Notice
Event of Default
Final Repayment Date
Group
Hong Kong
Interest Payment Date
Interest Period
Interest Rate
Lender
Loan
Loan Amount
Material Adverse Effect
Note Certificate
Outstanding Amount
Parties
Person
Potential Event of Default
Repayment Date
Repayment Schedule
Security
Security Documents
Shareholder
Subsidiary
Tax
Transaction Documents
Transfer
HKD
USD
Working Day
Business Day
Company
Completion Date
Default Interest Rate
Default Notice
Drawdown Date
Drawdown Notice
Event of Default
Final Repayment Date
Group
Hong Kong
Interest Payment Date
Interest Period
Interest Rate
Lender
Loan
Loan Amount
Material Adverse Effect
Note Certificate
Outstanding Amount
Parties
Person
Potential Event of Default
Repayment Date
Repayment Schedule
Security
Security Documents
Shareholder
Subsidiary
Tax
Transaction Documents
Transfer
HKD
USD
Working Day
Clauses
Loan Amount
Interest
Repayment
Security
Representations and Warranties
Events of Default
Acceleration
Tax Gross-up
Payments
Currency
Assignment and Transfer
Information Undertakings
General Undertakings
Costs and Expenses
Indemnities
Set-off
Notices
Amendments and Waivers
Severability
Counterparts
Governing Law
Jurisdiction
Service of Process
Subordination
Conversion Rights
Confidentiality
Further Assurance
Registration and Stamp Duty
Time of Essence
Interest
Repayment
Security
Representations and Warranties
Events of Default
Acceleration
Tax Gross-up
Payments
Currency
Assignment and Transfer
Information Undertakings
General Undertakings
Costs and Expenses
Indemnities
Set-off
Notices
Amendments and Waivers
Severability
Counterparts
Governing Law
Jurisdiction
Service of Process
Subordination
Conversion Rights
Confidentiality
Further Assurance
Registration and Stamp Duty
Time of Essence
Relevant Industries
Financial Services
Technology
Real Estate
Manufacturing
Retail
Professional Services
Healthcare
Energy
Infrastructure
Construction
Media and Entertainment
Telecommunications
Relevant Teams
Legal
Finance
Treasury
Corporate Secretarial
Tax
Compliance
Corporate Development
Board of Directors
Executive Management
Relevant Roles
Chief Financial Officer
Finance Director
Corporate Lawyer
Company Secretary
Treasury Manager
Financial Controller
Legal Counsel
Corporate Finance Manager
Investment Director
Board Director
Compliance Officer
Tax Manager
Managing Director
CEO
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