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Intercompany Credit Agreement Template for Canada

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Key Requirements PROMPT example:

Intercompany Credit Agreement

"Need an Intercompany Credit Agreement for a CAD 5 million loan from our Canadian parent company to our technology subsidiary in Ontario, with quarterly interest payments and full repayment by March 2025; must include transfer pricing compliance provisions."

Document background
The Intercompany Credit Agreement is a crucial document for managing internal financing within corporate groups operating in Canada. It is typically used when one group company provides financing to another related company, whether for operational needs, expansion projects, or capital investments. The agreement must comply with Canadian federal and provincial regulations, including the Interest Act, Income Tax Act (particularly transfer pricing rules), and relevant corporate laws. This document includes detailed provisions for loan terms, interest calculations, security arrangements (if applicable), and tax implications. It serves both as a legal document establishing the lending relationship and as supporting documentation for tax and regulatory compliance purposes. The agreement is particularly important for demonstrating arm's length terms in related party transactions and supporting interest deductibility under Canadian tax laws.
Suggested Sections

1. Parties: Identification of the lender and borrower entities, including registration details and addresses

2. Background: Context of the intercompany lending arrangement and relationship between the parties

3. Definitions: Definitions of key terms used throughout the agreement

4. The Facility: Details of the credit facility, including amount, purpose, and availability period

5. Interest: Interest rate, calculation method, and payment terms in compliance with Canadian Interest Act

6. Repayment: Terms and conditions for repayment of the principal amount

7. Prepayment: Conditions and procedures for early repayment of the loan

8. Representations and Warranties: Standard representations and warranties from both parties

9. Covenants: Positive and negative covenants applicable to the borrower

10. Events of Default: Circumstances constituting default and consequences thereof

11. Taxes: Treatment of taxes, including withholding tax requirements under Canadian law

12. Changes to Parties: Provisions for assignment and transfer of rights

13. Notices: Communication procedures between parties

14. Governing Law and Jurisdiction: Specification of Canadian law as governing law and jurisdiction for disputes

15. Execution: Signature blocks and execution formalities

Optional Sections

1. Security: Include when the loan is secured by assets or guarantees

2. Currency Provisions: Required when loan and repayments are in different currencies

3. Subordination: Include when the loan needs to be subordinated to other debt

4. Tax Gross-Up: Include when borrower agrees to gross up payments for withholding taxes

5. Guarantee: Include when there are corporate guarantors for the loan

6. Transfer Pricing Compliance: Include detailed transfer pricing compliance terms when parties are in different jurisdictions

7. Set-off Rights: Include when parties want to establish mutual set-off rights

8. Regulatory Compliance: Include specific regulatory compliance provisions if either party is regulated

9. Anti-Money Laundering: Include detailed AML provisions if required by company policy or regulation

Suggested Schedules

1. Schedule 1 - Loan Terms: Detailed terms of the loan including amount, interest rate, and payment dates

2. Schedule 2 - Drawdown Request Form: Standard form for requesting drawdowns under the facility

3. Schedule 3 - Repayment Schedule: Amortization or repayment schedule if applicable

4. Schedule 4 - Calculation of Interest: Detailed methodology for interest calculation

5. Schedule 5 - Conditions Precedent: List of required documents and conditions to be satisfied before drawdown

6. Appendix A - Compliance Certificate: Form of periodic compliance certificate

7. Appendix B - Notice Forms: Standard forms for various notices under the agreement

8. Appendix C - Transfer Pricing Documentation: Required transfer pricing documentation and methodology

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions













































Clauses


































Relevant Industries

Financial Services

Manufacturing

Technology

Retail

Energy

Mining

Healthcare

Real Estate

Transportation

Telecommunications

Professional Services

Consumer Goods

Agriculture

Construction

Media and Entertainment

Relevant Teams

Legal

Finance

Treasury

Tax

Compliance

Risk Management

Corporate Secretariat

Financial Reporting

Corporate Finance

Board Secretariat

Internal Audit

Relevant Roles

Chief Financial Officer

Treasury Manager

Financial Controller

Tax Director

Legal Counsel

Corporate Secretary

Finance Director

Group Accountant

Treasury Analyst

Tax Manager

Compliance Officer

Risk Manager

Corporate Finance Manager

Board Director

Managing Director

Financial Reporting Manager

Transfer Pricing Specialist

Group Financial Controller

Industries









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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