Royalty Loan Agreement for Singapore

Royalty Loan Agreement Template for Singapore

A Royalty Loan Agreement under Singapore law is a specialized financing instrument where a lender provides funding in exchange for regular payments calculated as a percentage of the borrower's revenue or other defined income stream. This agreement is governed by Singapore's legal framework, including the Civil Law Act and Moneylenders Act, and typically includes detailed provisions for calculating royalties, payment terms, default scenarios, and security arrangements where applicable. It combines elements of traditional loan agreements with revenue-sharing mechanisms.

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What is a Royalty Loan Agreement?

The Royalty Loan Agreement serves as an alternative financing solution for businesses seeking capital without traditional fixed repayment terms. Under Singapore jurisdiction, this document structures a financing arrangement where repayment is tied to the borrower's performance through royalty payments, typically calculated as a percentage of revenue or similar metrics. The agreement is particularly useful for companies with growing revenues but limited assets for traditional security, and includes comprehensive provisions for calculation methods, payment mechanisms, reporting requirements, and default scenarios. The document combines elements of debt financing with performance-based payments, making it attractive for both established businesses and growth-stage companies.

What sections should be included in a Royalty Loan Agreement?

1. Parties: Identification and details of the lender and borrower

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

3. Definitions: Key terms used throughout the agreement including 'Royalty', 'Revenue', 'Payment Period'

4. Loan Amount and Disbursement: Details of the loan principal and how/when it will be provided

5. Royalty Payments: Calculation method, payment frequency, and reporting requirements

6. Term and Repayment: Duration of the agreement and repayment obligations

7. Representations and Warranties: Standard declarations by both parties

8. Events of Default: Circumstances constituting default and consequences

9. Governing Law and Jurisdiction: Specifies Singapore law and courts' jurisdiction

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

1. Security: Details of any collateral or guarantees - include when additional security is required

2. Intellectual Property Rights: IP ownership and licensing provisions - include when royalties are based on IP exploitation

3. Change of Control: Provisions dealing with ownership changes - include for corporate borrowers

4. Tax Provisions: Handling of withholding tax and other tax matters - include for cross-border transactions

What schedules should be included in a Royalty Loan Agreement?

1. Royalty Calculation Schedule: Detailed methodology for calculating royalty payments

2. Form of Revenue Report: Template for periodic revenue reporting

3. Payment Schedule: Timeline of expected payments

4. Security Documents: If applicable, details of security arrangements

5. Compliance Certificate: Template for periodic compliance certification

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

Singapore

Publisher

Genie AI

Document Type

Financing Agreement

Cost

Free to use
Relevant legal definitions
Industries

Civil Law Act (Cap. 43): Primary legislation governing contractual relationships and enforceability. Contains key provisions about interest rates and loan regulations.

Moneylenders Act (Cap. 188): Regulates moneylending activities and must be considered if the lender falls under the definition of a moneylender.

Securities and Futures Act (Cap. 289): Applicable if the royalty agreement involves securities or financial instruments. May affect royalty payment structuring.

Singapore Contract Law: Common law principles governing contract formation, consideration requirements, and terms and conditions.

Companies Act (Cap. 50): Governs corporate authority requirements and registration requirements if security is provided. Relevant when parties are companies.

Copyright Act: Intellectual property law relevant for royalties involving copyrighted works.

Patents Act: Intellectual property law relevant for royalties involving patented inventions.

Trade Marks Act: Intellectual property law relevant for royalties involving trademark usage.

Income Tax Act: Governs withholding tax obligations on royalty payments, tax treatment of royalty income, and considerations for international double taxation agreements.

MAS Regulations: Monetary Authority of Singapore regulations applicable if the arrangement involves regulated financial activities.

Personal Data Protection Act: Governs the collection, use, and disclosure of personal data if processed as part of the agreement.

Key Agreement Components: Essential elements including royalty calculation method, payment terms, default provisions, security arrangements, dispute resolution, assignment rights, termination provisions, and confidentiality obligations.

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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