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Promissory Note Shareholder Loan To Corporation for the United Kingdom

Promissory Note Shareholder Loan To Corporation Template for England and Wales

A Promissory Note Shareholder Loan To Corporation is a legally binding document under English and Welsh law that evidences a debt obligation from a corporation to one of its shareholders. It details the loan amount, interest rate, repayment terms, and any security arrangements. The document combines elements of corporate law and lending regulations, providing protection for both the lending shareholder and the borrowing corporation while ensuring compliance with Companies Act 2006 requirements.

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What is a Promissory Note Shareholder Loan To Corporation?

A Promissory Note Shareholder Loan To Corporation is commonly used when a shareholder provides additional funding to their company through a loan rather than equity investment. This document, governed by English and Welsh law, provides formal documentation of the debt, protecting both parties' interests while ensuring compliance with corporate lending regulations. It includes essential details such as loan amount, interest rates, repayment terms, and any security arrangements, while maintaining the distinction between the shareholder's role as both investor and creditor.

What sections should be included in a Promissory Note Shareholder Loan To Corporation?

1. Parties: Identifies the lender (shareholder) and borrower (corporation)

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

3. Definitions: Key terms used throughout the document

4. Principal Amount: States the amount being loaned

5. Interest Rate: Specifies interest rate and calculation method

6. Repayment Terms: Details of when and how repayment should occur

7. Execution: Signature blocks and execution formalities

What sections are optional to include in a Promissory Note Shareholder Loan To Corporation?

1. Security: Details of any security provided for the loan - used when loan is secured

2. Events of Default: Circumstances constituting default - used for larger or more formal loans

3. Subordination: Position relative to other creditors - used when company has other creditors

4. Early Repayment: Terms for early repayment - used if early repayment is permitted

What schedules should be included in a Promissory Note Shareholder Loan To Corporation?

1. Repayment Schedule: Detailed breakdown of repayment dates and amounts

2. Security Details: Description of any security provided - for secured loans

3. Corporate Authorizations: Company resolutions authorizing the loan

Authors

Alex Denne

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

Jurisdiction

England and Wales

Publisher

Ƶ

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions






























Clauses


































Industries

Companies Act 2006: Primary legislation governing company operations including provisions for loans to companies, directors' duties, company's borrowing powers, and registration requirements for charges

Financial Services and Markets Act 2000: Regulatory framework for financial instruments, securities regulations, and financial promotion rules that may apply to corporate lending

Consumer Credit Act 1974: While primarily focused on consumer lending, contains relevant documentation requirements and principles that may inform corporate lending practices

Law of Property (Miscellaneous Provisions) Act 1989: Governs requirements for creating valid security interests and execution requirements for property-related aspects of loans

Insolvency Act 1986: Covers corporate insolvency provisions, creditor priority ordering, and rules regarding transactions at an undervalue

Financial Collateral Arrangements (No 2) Regulations 2003: Regulations pertaining to security arrangements in financial transactions, relevant if security is provided for the loan

Common Law Principles: Fundamental legal principles governing contract formation, consideration, and capacity to contract

Corporate Benefit Doctrine: Legal principle requiring that loans and other corporate transactions serve a proper corporate purpose

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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