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The Intercompany Loan Agreement is a crucial document used when one company within a corporate group provides financing to another related company in Pakistan. This agreement is essential for documenting internal group financing arrangements while ensuring compliance with Pakistani corporate law, banking regulations, and tax requirements. It typically becomes necessary during group restructuring, expansion projects, or when optimizing internal capital allocation. The document must address specific Pakistani regulatory requirements, including corporate authorization levels, State Bank of Pakistan regulations if applicable, and local tax implications. The agreement should be structured to withstand scrutiny from tax authorities and regulators while providing clear mechanisms for loan disbursement, repayment, and enforcement.

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

2. Background: Context of the intercompany relationship and purpose of the loan

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

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

5. Interest: Interest rate, calculation method, and payment terms

6. Drawdown: Conditions and procedure for drawdown of the loan

7. Repayment: Terms and schedule for repayment of principal and interest

8. Representations and Warranties: Standard corporate representations and specific financial warranties

9. Covenants: Financial and non-financial obligations of the borrower

10. Events of Default: Circumstances constituting default and consequences

11. Tax Provisions: Treatment of withholding tax and other tax obligations

12. Governing Law and Jurisdiction: Specification of Pakistani law and jurisdiction

13. Notices: Process for formal communications between parties

14. Boilerplate Provisions: Standard contract clauses including amendments, assignment, and severability