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Loan Agreement Between Parent Company And Subsidiary for Australia

Loan Agreement Between Parent Company And Subsidiary Template for Australia

An Australian-law governed loan agreement designed for use between a parent company and its subsidiary, incorporating key requirements under Australian corporate and financial services law. The agreement provides a comprehensive framework for intercompany lending, including detailed terms for the facility, interest calculations, repayment provisions, and necessary compliance elements under the Corporations Act 2001. It addresses specific Australian regulatory requirements for related party transactions, transfer pricing considerations, and financial sector obligations while maintaining appropriate corporate governance standards.

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Loan Agreement Between Parent Company And Subsidiary

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What is a Loan Agreement Between Parent Company And Subsidiary?

A Loan Agreement Between Parent Company And Subsidiary is a critical document used to formalize and regulate financial arrangements within corporate groups operating in Australia. This agreement is essential when a parent company provides funding to its subsidiary for various purposes such as working capital, expansion, or specific projects. The document must comply with Australian corporate law requirements, particularly the Corporations Act 2001, and address related party transaction rules, transfer pricing regulations, and tax implications. It's commonly used in group restructuring, internal financing arrangements, and corporate treasury management, requiring careful consideration of directors' duties and corporate governance obligations. The agreement includes comprehensive terms covering facility details, security arrangements, financial covenants, and reporting requirements, while ensuring arm's length terms despite the related party nature of the transaction.

What sections should be included in a Loan Agreement Between Parent Company And Subsidiary?

1. Parties: Identifies the parent company as lender and subsidiary as borrower, including full legal names and registration details

2. Background: Sets out the context of the loan, relationship between parties, and purpose of the facility

3. Definitions: Defines key terms used throughout the agreement, including financial terms, dates, and compliance requirements

4. Facility Details: Specifies loan amount, purpose, availability period, and drawdown conditions

5. Interest and Fees: Details interest rate, calculation method, payment dates, and any applicable fees

6. Repayment Terms: Outlines repayment schedule, prepayment provisions, and payment mechanics

7. Conditions Precedent: Lists conditions that must be satisfied before the loan becomes available

8. Representations and Warranties: Standard corporate representations plus subsidiary-specific warranties

9. Undertakings: Financial and general covenants, reporting requirements, and operational restrictions

10. Events of Default: Specifies circumstances constituting default and consequences

11. Taxes and Stamp Duty: Addresses tax implications and responsibilities for payments

12. Notices: Details how formal communications between parties should be made

13. General Provisions: Standard boilerplate clauses including governing law, assignment, and amendments

What sections are optional to include in a Loan Agreement Between Parent Company And Subsidiary?

1. Security: Required if the loan is to be secured by assets or guarantees

2. Subordination: Needed if the loan is to be subordinated to other debt facilities

3. Cross-Default: Include if there are other financing arrangements that should trigger default

4. Change of Control: Include if changes in subsidiary ownership should affect the loan

5. Transfer Pricing Compliance: Required for cross-border related party loans

6. Currency and Exchange Rate: Include for loans in foreign currency or with international payments

7. Group Treasury Management: Include if loan is part of broader group treasury arrangements

8. Related Party Transaction Compliance: Include specific provisions ensuring compliance with Corporations Act requirements

What schedules should be included in a Loan Agreement Between Parent Company And Subsidiary?

1. Facility Terms: Detailed commercial terms including amounts, interest rates, and payment dates

2. Drawdown Notice: Form of notice for requesting loan disbursements

3. Conditions Precedent Documents: List of required documentation and conditions

4. Financial Covenants: Detailed financial ratios and calculations

5. Security Details: If applicable, details of security arrangements and secured assets

6. Compliance Certificate: Form of periodic compliance certification

7. Repayment Schedule: Detailed amortization or repayment schedule

8. Transfer Pricing Documentation: Required documentation for arm's length terms

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

Australia

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Cost

Free to use
Relevant legal definitions



















































Clauses


































Relevant Industries

Financial Services

Mining and Resources

Manufacturing

Retail

Technology

Healthcare

Real Estate

Infrastructure

Agriculture

Professional Services

Transport and Logistics

Energy

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Tax

Compliance

Corporate Development

Risk Management

Company Secretariat

Board

Accounting

Corporate Finance

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Company Secretary

Financial Controller

Tax Manager

Compliance Officer

Corporate Finance Manager

Group Accountant

Director of Corporate Development

Risk Manager

Board Director

Managing Director

Commercial Director

Industries








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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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