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Directors Loan Agreement

Directors Loan Agreement Template for Australia

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Key Requirements PROMPT example:

Directors Loan Agreement

"I need a Director's Loan Agreement for a secured loan of $500,000 to our company director, with the director's investment property offered as security and monthly repayments over 7 years starting from March 2025."

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Document background
A Director's Loan Agreement is essential when a company provides financial accommodation to a director in Australia. This document is specifically designed to comply with Australian corporate law requirements, including the Corporations Act 2001 (Cth) and Division 7A of the Income Tax Assessment Act 1936. It should be used whenever a director borrows funds from their company or when existing informal lending arrangements need to be formalized. The agreement includes crucial elements such as loan amount, purpose, interest rates (meeting Division 7A minimum requirements), repayment schedules, security provisions, and default consequences. It helps prevent loans from being deemed dividends for tax purposes and ensures proper corporate governance in related party transactions. The document should be reviewed by legal and tax professionals to ensure compliance with current regulations and protect both the company's and director's interests.
Suggested Sections

1. Parties: Identifies the company and the director entering into the loan agreement

2. Background: Outlines the context of the loan agreement, including the director's relationship with the company and the purpose of the loan

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Loan Amount and Purpose: Specifies the loan amount and permitted use of funds

5. Interest: Details the interest rate (complying with Division 7A requirements) and calculation method

6. Repayment Terms: Specifies repayment schedule, payment methods, and maximum term (complying with Division 7A)

7. Representations and Warranties: Standard declarations by the director regarding their capacity and authority to enter the agreement

8. Events of Default: Defines circumstances constituting default and consequences

9. Termination: Conditions and process for early termination of the agreement

10. General Provisions: Standard boilerplate clauses including notices, amendments, governing law, and jurisdiction

Optional Sections

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

2. Early Repayment: Include when allowing for early repayment options and associated conditions

3. Draw Down Conditions: Include when the loan is to be provided in installments or subject to conditions

4. Financial Covenants: Include when specific financial conditions must be maintained by the director

5. Insurance Requirements: Include when insurance of specific assets or life insurance is required

6. Guarantee: Include when a third-party guarantee is required for the loan

7. Set-off Rights: Include when the company requires rights to set off the loan against other payments to the director

Suggested Schedules

1. Repayment Schedule: Detailed schedule of repayment dates and amounts (required for Division 7A compliance)

2. Secured Assets Schedule: Description of any assets provided as security for the loan

3. Loan Drawdown Schedule: If applicable, schedule of planned loan disbursements

4. Division 7A Compliance Declaration: Standard form declaration regarding Division 7A compliance

5. Minimum Yearly Repayment Calculator: Worksheet for calculating minimum yearly repayments under Division 7A

Authors

Alex Denne

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

alex.den.21@genieai.co
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Relevant Industries

Professional Services

Financial Services

Technology

Manufacturing

Retail

Construction

Healthcare

Mining

Agriculture

Real Estate

Hospitality

Education

Transportation

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Governance

Tax

Compliance

Board of Directors

Company Secretariat

Risk Management

Treasury

Audit

Relevant Roles

Director

Company Secretary

Chief Executive Officer

Chief Financial Officer

Financial Controller

Corporate Lawyer

Tax Manager

Compliance Officer

Board Member

Company Accountant

Legal Counsel

Risk Manager

Corporate Governance Officer

Finance Manager

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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