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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.

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