The Loan Agreement Between Parent Company And Subsidiary is a crucial document for corporate groups operating in South Africa that need to establish formal lending arrangements within their group structure. This agreement is typically used when a parent company provides financial assistance to its subsidiary for various purposes such as working capital, expansion, or specific projects. The document must comply with South African legal requirements, including the Companies Act 71 of 2008, which governs financial assistance between related companies, and the Income Tax Act 58 of 1962, which regulates the tax implications of inter-company loans. The agreement should address transfer pricing considerations, thin capitalization rules, and where applicable, exchange control regulations. It's essential for establishing clear terms, protecting both parties' interests, and ensuring regulatory compliance in the South African context.

1. Parties: Identifies the parent company as lender and subsidiary as borrower, including registration numbers and registered addresses

2. Background: Sets out the relationship between the parties and purpose of the loan

3. Definitions and Interpretation: Defines key terms and establishes interpretation rules for the agreement

4. Loan Amount and Purpose: Specifies the loan amount, currency, and permitted use of funds

5. Interest: Details the interest rate, calculation method, and payment periods

6. Repayment Terms: Specifies repayment schedule, prepayment rights, and payment mechanics

7. Conditions Precedent: Lists conditions that must be satisfied before the loan becomes available

8. Representations and Warranties: Standard company representations plus specific subsidiary financial conditions

9. Covenants: Ongoing obligations of the subsidiary, including financial covenants and reporting requirements

10. Events of Default: Circumstances that trigger default and lender's remedies

11. Tax Provisions: Addresses withholding tax, transfer pricing compliance, and tax-related representations

12. Notices: Specifies how formal communications between parties should be made

13. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and amendment procedures