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The Loan Agreement Shareholder To Company is a crucial document used when a company seeks financing from its existing shareholders rather than external sources. This arrangement is common in Indian businesses, particularly in startup and growth phases, or when conventional financing might be less advantageous. The agreement must comply with Indian corporate law, including the Companies Act 2013, and address related party transaction requirements. It typically includes detailed terms about the loan amount, interest rates, repayment schedule, default provisions, and any security arrangements. The document is particularly important for maintaining transparency in related party transactions and protecting both the lending shareholder's and company's interests while ensuring regulatory compliance.

1. Parties: Identifies the shareholder lender and the borrowing company, including their legal details and registered addresses

2. Background: Explains the context of the loan, the relationship between the parties, and the company's need for funding

3. Definitions: Defines key terms used throughout the agreement for clarity and legal certainty

4. Loan Amount and Purpose: Specifies the loan amount and its intended use by the company

5. Interest Rate and Calculation: Details the applicable interest rate, calculation method, and payment frequency

6. Drawdown: Specifies the conditions and process for disbursement of the loan amount

7. Repayment Terms: Outlines the repayment schedule, including principal and interest payment dates

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

9. Company's Covenants: Ongoing obligations of the company during the loan period

10. Events of Default: Lists circumstances that constitute default and their consequences

11. Remedies: Specifies the lender's rights and remedies in case of default

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

13. Governing Law and Jurisdiction: Establishes Indian law as governing law and specifies jurisdiction for disputes

14. Counterparts: Allows the agreement to be executed in multiple copies