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Shareholder Loan Note for Singapore

Shareholder Loan Note Template for Singapore

A Shareholder Loan Note is a legal document governed by Singapore law that formalizes a loan arrangement between a shareholder and their company. It details the terms of borrowing, including principal amount, interest rates, repayment schedules, and default provisions. The document complies with Singapore's Companies Act and related regulations, providing security for both the lending shareholder and the borrowing company while maintaining transparency for corporate governance purposes.

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What is a Shareholder Loan Note?

A Shareholder Loan Note is commonly used in Singapore when a company requires additional funding and opts to obtain it from existing shareholders rather than external lenders. This document type is particularly relevant for companies seeking to avoid dilution through equity financing or facing challenges accessing traditional bank lending. The Shareholder Loan Note provides a formal structure for the lending arrangement, ensuring compliance with Singapore's corporate and securities laws while protecting both the shareholder's investment and the company's interests. It includes essential details such as interest rates, repayment terms, security arrangements (if any), and default provisions.

What sections should be included in a Shareholder Loan Note?

1. Parties: Identification of lender (shareholder) and borrower (company)

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

3. Definitions: Key terms used throughout the document

4. Loan Amount and Purpose: Principal sum and intended use of funds

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

6. Repayment Terms: Schedule and method of repayment

7. Events of Default: Circumstances constituting default and consequences

8. Representations and Warranties: Standard assurances from both parties

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

1. Security: Details of any security/collateral (include when loan is secured)

2. Conversion Rights: Terms for converting loan to equity (include for convertible loans)

3. Subordination: Priority ranking of the loan (include when other creditors exist)

4. Tax Gross-Up: Provisions for tax implications (include when withholding tax applies)

What schedules should be included in a Shareholder Loan Note?

1. Repayment Schedule: Detailed payment dates and amounts

2. Form of Drawdown Notice: Template for requesting loan disbursement

3. Security Documents: Details of any security arrangements

4. Conditions Precedent: List of required documents and conditions

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

Singapore

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions






































Clauses






























Industries

Companies Act (Cap. 50): Primary legislation governing corporate borrowing powers, requirements for charges registration, directors' duties and responsibilities, and financial assistance restrictions

Securities and Futures Act (Cap. 289): Regulates debenture considerations, disclosure requirements, and securities offering regulations for loan notes

Income Tax Act: Governs tax treatment of interest payments, withholding tax obligations, and deductibility of interest expenses in loan arrangements

Moneylenders Act (Cap. 188): Ensures compliance with moneylending regulations and relevant exemptions for companies and shareholders

Contract Law (Common Law): Covers fundamental principles of contract formation, consideration requirements, and terms and conditions

Stamp Duties Act: Determines stamp duty obligations and requirements for loan documentation

Personal Data Protection Act 2012: Regulates the collection, use, and disclosure of personal data in loan documentation

MAS Guidelines: Provides regulatory framework for corporate lending and anti-money laundering requirements from the Monetary Authority of Singapore

Corporate Governance Code: Sets out principles and guidelines for corporate governance in relation to company transactions and obligations

Foreign Investment Regulations: Governs foreign investment aspects of shareholder loans where applicable

Exchange Control Regulations: Regulates currency exchange and foreign currency transactions related to shareholder loans

Bankruptcy Act: Provides framework for handling default scenarios and creditor rights in case of insolvency

Teams

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