Directors Loan Agreement Template for India

The Director's Loan Agreement is a crucial document used when a company provides financial assistance to its director in India. This arrangement must strictly comply with the Companies Act 2013, particularly Sections 185 and 186, which regulate loans to directors and related party transactions. The agreement becomes necessary when a director requires funding for personal or professional purposes, and the company agrees to provide such funding under specified terms. It includes comprehensive details about the loan amount, interest rates, repayment schedule, security (if any), and default provisions. The document ensures transparency, maintains corporate governance standards, and protects both parties' interests while meeting all statutory requirements under Indian law. Board approval and proper documentation are essential prerequisites for executing this agreement.

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

2. Background: Context of the loan, including board approval reference 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 and its intended use

5. Interest Rate: Details of applicable interest rate, calculation method, and payment frequency

6. Repayment Terms: Schedule and method of loan repayment, including installment details if applicable

7. Representations and Warranties: Standard declarations by both parties regarding their capacity and authority

8. Covenants: Ongoing obligations of the director during the loan term

9. Events of Default: Circumstances constituting default and consequences thereof

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

11. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

12. Notices: Process and addresses for formal communications between parties