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Shareholder Loan Note for Germany

Shareholder Loan Note Template for Germany

A comprehensive legal agreement governed by German law that documents a loan provided by a shareholder to their company. The document establishes the terms and conditions of the loan, including principal amount, interest rate, repayment terms, and any security arrangements. It complies with German corporate and civil law requirements, particularly regarding shareholder financing and subordination rules under the German Limited Liability Companies Act (GmbH-Gesetz) and the German Insolvency Code (Insolvenzordnung). The agreement includes specific provisions for interest calculation, default scenarios, and regulatory compliance requirements under German banking and tax laws.

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Shareholder Loan Note

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What is a Shareholder Loan Note?

The Shareholder Loan Note is commonly used in German corporate financing when a company requires additional funding and opts to receive it from existing shareholders rather than external lenders. This approach is particularly valuable for growing companies, during bridge financing periods, or when traditional bank financing is less advantageous. The document must carefully balance the interests of the shareholder-lender with German corporate law requirements, particularly regarding capital maintenance rules and subordination requirements. A well-structured Shareholder Loan Note will address key elements such as interest rates, repayment terms, and potential conversion rights, while ensuring compliance with German banking regulations (KWG) and tax implications. The document is especially relevant during corporate restructuring, expansion phases, or when companies need to strengthen their working capital position.

What sections should be included in a Shareholder Loan Note?

1. Parties: Identification of the Shareholder (Lender) and the Company (Borrower), including full legal names, registration details, and addresses

2. Background: Context of the loan, relationship between the parties, and purpose of the financing

3. Definitions: Key terms used throughout the agreement, including 'Business Day', 'Default Event', 'Interest Period', etc.

4. Loan Amount and Purpose: Specification of the principal amount, currency, and permitted use of the loan proceeds

5. Interest: Interest rate, calculation method, payment dates, and default interest provisions

6. Repayment Terms: Schedule for repayment, prepayment options, and mandatory prepayment events

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

8. Representations and Warranties: Standard company representations regarding capacity, authority, and financial condition

9. Covenants: Ongoing obligations of the borrower, including information provision and financial covenants

10. Events of Default: Circumstances that trigger default and acceleration of the loan

11. Subordination: Provisions regarding ranking of the loan, particularly in relation to other creditors

12. Tax Provisions: Treatment of taxes on interest payments and gross-up obligations

13. Notices: Communication procedures between parties

14. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction for disputes

What sections are optional to include in a Shareholder Loan Note?

1. Security: Include if the loan is to be secured by any company assets or guarantees

2. Conversion Rights: Include if the loan can be converted into equity under certain conditions

3. Regulatory Compliance: Include specific sections on KWG compliance if loan amount triggers banking regulation requirements

4. Change of Control: Include if loan is to become immediately repayable upon change in company ownership

5. Information Rights: Include if lender requires specific reporting beyond standard financial statements

6. Costs and Expenses: Include if specific arrangements for transaction costs need to be documented

7. Assignment and Transfer: Include if either party needs right to transfer the loan

8. Participation Rights: Include if shareholder-lender is to receive specific participation rights

What schedules should be included in a Shareholder Loan Note?

1. Repayment Schedule: Detailed amortization table if loan involves multiple repayment dates

2. Form of Drawdown Notice: Standard form for requesting loan disbursement

3. Calculation of Interest: Detailed methodology for interest calculations if complex

4. Form of Compliance Certificate: Template for periodic confirmation of compliance with loan terms

5. Security Documents: If applicable, forms of security agreements or guarantees

6. Corporate Authorizations: Copies of relevant board and shareholder resolutions

7. Subordination Terms: Detailed subordination provisions if complex arrangements with other creditors exist

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

Germany

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions













































Clauses




























Relevant Industries

Technology

Manufacturing

Real Estate

Healthcare

Retail

Professional Services

Energy

Infrastructure

Financial Services

Transportation

Media and Entertainment

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Tax

Compliance

Corporate Secretariat

Risk Management

Corporate Development

Investment Relations

Board Secretariat

Relevant Roles

Chief Financial Officer

Finance Director

Corporate Lawyer

Legal Counsel

Treasury Manager

Company Secretary

Financial Controller

Investment Manager

Corporate Finance Manager

Tax Director

Compliance Officer

Risk Manager

Managing Director

Board Member

Shareholder Relations Manager

Industries








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