Directors Loan Agreement Template for Saudi Arabia

The Directors Loan Agreement is a crucial document used when a company in Saudi Arabia extends a loan to one of its directors, whether for business investment, personal purposes, or as part of a compensation package. The agreement must be structured to comply with Saudi Arabian Companies Law, Capital Market Authority regulations (for listed companies), and Sharia principles which prohibit conventional interest. It requires careful consideration of corporate governance requirements, particularly regarding related party transactions and conflicts of interest. The document typically requires board approval and, depending on the loan amount and company's articles, may need shareholder approval. All loan terms must be clearly documented, including purpose, repayment schedule, any security arrangements, and consequences of default, while ensuring transparency and protection for both the company and its shareholders.

1. Parties: Identification of the company and the director entering into the loan agreement

2. Background: Context of the loan agreement, including the company's authority to provide the loan and confirmation of board approval

3. Definitions: Key terms used throughout the agreement, including financial terms and compliance-related definitions

4. Loan Amount and Purpose: Specification of the loan amount and its intended use, ensuring compliance with Sharia principles

5. Repayment Terms: Structure and schedule of repayment, including profit rate (if applicable) in compliance with Sharia principles

6. Security and Guarantees: Details of any security or personal guarantees provided for the loan

7. Representations and Warranties: Statements of fact by the director regarding their position, authority, and financial status

8. Covenants: Ongoing obligations of the director during the term of the loan

9. Events of Default: Circumstances that would constitute a breach and trigger early repayment

10. Termination: Conditions and process for early termination of the agreement

11. Governing Law and Jurisdiction: Specification of Saudi law as governing law and relevant courts for disputes

12. Notices: Process and addresses for formal communications between parties

13. Execution: Signature blocks and execution requirements