Document background
The Founder Loan Agreement is a crucial document used when a company founder requires financial assistance from their company or when the company needs to formalize existing financial arrangements with its founders. This agreement, governed by South African law, must comply with the Companies Act 71 of 2008, particularly regarding financial assistance to directors and related parties. The document becomes necessary during various stages of company growth, including startup funding gaps, expansion phases, or personal financial needs of founders. It typically includes detailed terms about the loan amount, interest rates, repayment schedule, security arrangements, and potential conversion rights, while ensuring proper corporate governance and shareholder protections are maintained. The agreement must also address tax implications and may require special approvals under South African corporate law.
