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Founder Loan Agreement Template for Singapore

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Key Requirements PROMPT example:

Founder Loan Agreement

"Need a Founder Loan Agreement under Singapore law for a S$500,000 loan from me to my tech startup, with quarterly interest payments and the option to convert to equity after 18 months if certain revenue targets are met by March 2025."

Document background
The Founder Loan Agreement is commonly used in Singapore when company founders provide financial support to their businesses through formal loans rather than equity investments. This document is crucial for maintaining clear separation between personal and company finances, protecting both the founder's interests as a creditor and the company's corporate governance requirements. The agreement must comply with Singapore's strict corporate lending regulations and typically includes detailed terms about interest, repayment, and potential conversion rights. It's particularly important for startups and growing companies where traditional financing may be limited.
Suggested Sections

1. Parties: Identification of the company and the founder providing the loan

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

3. Definitions: Key terms used throughout the agreement

4. Loan Amount and Purpose: Specification of the loan amount and its intended use

5. Interest Rate: Terms of interest payment and calculation method

6. Repayment Terms: Schedule and method of repayment

7. Events of Default: Circumstances constituting default and consequences

8. Representations and Warranties: Standard declarations by both parties

Optional Sections

1. Security: Details of any collateral or security provided for the loan

2. Conversion Rights: Terms and conditions for converting the loan to equity

3. Board Approval: Specific requirements for corporate approvals and governance

4. Subordination: Provisions regarding ranking of loan against other company debt

Suggested Schedules

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

2. Form of Draw Down Notice: Template for requesting loan disbursements

3. Security Documents: Details of any security or collateral arrangements

4. Corporate Authorizations: Copies of relevant board/shareholder resolutions

Authors

Alex Denne

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

Relevant legal definitions
































Clauses




























Industries

Companies Act (Cap. 50): Primary legislation governing company operations in Singapore, including corporate lending, director's duties, and financial assistance provisions

Securities and Futures Act (Cap. 289): Regulates securities and financial instruments, relevant for any security aspects of the loan agreement

Moneylenders Act (Cap. 188): Regulates moneylending activities in Singapore, may be relevant depending on the loan structure

Contract Law: Chapter 2 of the Application of English Law Act, governing basic contract formation and enforcement principles

Common Law Principles: Singapore's common law principles regarding contract formation, interpretation, and enforcement

Director's Duties: Legal obligations and fiduciary duties of directors under Singapore company law and case law

MAS Regulations: Monetary Authority of Singapore regulations affecting corporate lending and financial transactions

Interest Rate Compliance: Regulations and restrictions regarding interest rates and usury laws in Singapore

Corporate Governance Requirements: Rules and best practices for corporate decision-making and approval processes

Income Tax Act: Tax implications and treatment of loan and interest payments under Singapore tax law

Stamp Duties Act: Requirements for stamp duty payment and compliance for loan documentation

Board Approval Requirements: Necessary corporate authorizations and board resolutions required for the loan agreement

Shareholder Approval: Requirements for shareholder approval if applicable under certain loan circumstances

Disclosure Obligations: Required disclosures and reporting requirements related to the loan agreement

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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