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Intercompany Loan Agreement

Document Type
Microsoft Word (Editable)
Pages
4
Price: KES 400
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Document Overview

An Intercompany Loan Agreement is a formal contract between two or more companies within the same corporate group for example, between a holding company and its subsidiary, or between sister companies, that sets out the terms and conditions under which one company lends money to another.

Purposes of an Intercompany Loan Agreement:

1. To formally document loan terms between related companies.

2. To ensure legal and tax compliance under the Companies Act and KRA rules.

3. To maintain transparency and accountability in group finances.

4. To manage cash flow efficiently within a corporate group.

5. To protect the lender’s interests and define repayment obligations.

Key Components of an Intercompany Loan Agreement:

1. Parties – Identification of the lender and borrower companies, including registration details and addresses.

2. Recitals – Background explaining the relationship and reason for the loan.

3. Loan Amount and Purpose – Specifies the sum being advanced and its intended use.

4. Interest Rate – States the applicable interest, calculation method, and payment frequency.

5. Repayment Terms – Details on repayment schedule, installment amounts, and prepayment rights.

6. Security (if any) – Indicates whether the loan is secured or unsecured and the type of collateral.

7. Representations and Warranties – Assurances from both parties about authority, legality, and compliance.

8. Events of Default – Conditions that trigger default and lender remedies.

10. Taxes and Withholding – Compliance with KRA withholding tax and transfer pricing rules.

11. Confidentiality – Obligations to keep financial and business information private.

12. Governing Law and Dispute Resolution – Specifies that Kenyan law applies and disputes are handled through arbitration.

13. Notices – Defines how formal communications between the parties will be made.

14. Miscellaneous Clauses – Includes entire agreement, amendment, severability, waiver, and assignment provisions.
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