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Directors Loan Agreement

Directors Loan Agreement Template for Malaysia

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Key Requirements PROMPT example:

Directors Loan Agreement

"I need a Directors Loan Agreement for my technology startup where I, as the managing director, will be lending RM 500,000 to the company with a 5% annual interest rate, to be repaid by March 2025."

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Document background
The Directors Loan Agreement is a crucial document used in Malaysian corporate practice when establishing formal lending arrangements between a company and its directors. This agreement is essential for compliance with the Companies Act 2016 and related Malaysian regulations, which require explicit documentation and disclosure of such related party transactions. The document becomes necessary when either a director needs to borrow funds from the company, or when a director is providing a loan to the company. It must include specific provisions required by Malaysian law, such as board approval requirements, disclosure obligations, and adherence to corporate governance standards. The agreement helps protect both parties' interests while ensuring transparency and regulatory compliance, particularly important in the Malaysian corporate environment where related party transactions are closely scrutinized.
Suggested Sections

1. Parties: Identification of the Company and the Director entering into the loan agreement

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

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

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

5. Interest Rate: Details of the applicable interest rate (if any) and calculation method

6. Repayment Terms: Repayment schedule, installment amounts, and payment methods

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

8. Events of Default: Circumstances that constitute default and their consequences

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

10. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction for disputes

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

12. Execution: Signature blocks and execution formalities

Optional Sections

1. Security: Details of any collateral or security provided for the loan - include when the loan is secured

2. Guarantee: Terms of any personal or corporate guarantee - include when a third party guarantees the loan

3. Insurance: Requirements for insurance coverage - include when specific insurance is required to protect the loan

4. Early Repayment: Terms for early repayment options - include when early repayment is permitted

5. Assignment: Rights and restrictions regarding assignment of the agreement - include when assignment rights are relevant

6. Board Approval: Details of board resolution approving the loan - include for corporate governance compliance

7. Tax Provisions: Specific tax-related terms and obligations - include when tax implications need clarification

8. Regulatory Compliance: Specific compliance requirements - include for listed companies or regulated entities

Suggested Schedules

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

2. Board Resolution: Copy of the board resolution approving the loan

3. Security Details: Detailed description of any security or collateral provided

4. Related Party Transaction Declaration: Declaration of related party transaction details as required by Companies Act

5. Loan Disbursement Schedule: Schedule of loan disbursement dates and amounts if paid in installments

6. Compliance Certificates: Required regulatory or compliance certificates

Authors

Alex Denne

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant Industries

Financial Services

Manufacturing

Technology

Real Estate

Retail

Healthcare

Professional Services

Construction

Energy

Transportation

Telecommunications

Education

Hospitality

Agriculture

Mining

Relevant Teams

Legal

Finance

Compliance

Corporate Secretarial

Board of Directors

Corporate Governance

Risk Management

Treasury

Executive Management

Relevant Roles

Director

Company Secretary

Chief Executive Officer

Chief Financial Officer

Financial Controller

Corporate Lawyer

Legal Counsel

Compliance Officer

Board Member

Corporate Governance Officer

Finance Manager

Company Director

Managing Director

Executive Director

Non-Executive Director

Industries
Companies Act 2016: The primary legislation governing corporate matters in Malaysia, including specific provisions on directors' duties, loans to directors, and disclosure requirements (particularly Sections 224-228 regarding loans to directors and related parties)
Income Tax Act 1967: Governs the tax implications of directors' loans, including treatment of interest (or lack thereof) and the potential classification of loans as taxable benefits
Financial Services Act 2013: Regulates financial transactions and may apply if the loan arrangement involves any regulated financial activities or instruments
Capital Markets and Services Act 2007: Relevant if the company is listed, as it governs disclosure requirements and related party transactions for public companies
Stamp Act 1949: Determines the stamp duty requirements for loan agreements in Malaysia
Contract Act 1950: Provides the basic legal framework for contract formation and enforcement in Malaysia, including essential elements of a valid contract
Malaysian Anti-Corruption Commission Act 2009: Relevant for ensuring the loan agreement doesn't violate anti-corruption provisions, particularly in related party transactions
Guidelines on Corporate Governance by Securities Commission Malaysia: Though not legislation, these guidelines provide important corporate governance requirements, particularly regarding related party transactions and directors' responsibilities
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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