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Loan Sharing Agreement for United Arab Emirates

Loan Sharing Agreement Template for United Arab Emirates

A comprehensive legal agreement governed by UAE law that establishes the terms and conditions for sharing loan participations between multiple lenders. The document outlines the rights, obligations, and responsibilities of all parties involved in the loan sharing arrangement, including profit distribution mechanisms, security arrangements, and compliance requirements. It incorporates relevant UAE banking regulations and may include Sharia-compliant structures where applicable. The agreement addresses risk allocation, payment mechanisms, default scenarios, and remedies while ensuring compliance with UAE Central Bank regulations and local financial laws.

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Loan Sharing Agreement

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What is a Loan Sharing Agreement?

The Loan Sharing Agreement is a crucial document used when multiple lenders wish to participate in a single loan facility while maintaining clear legal structure and risk allocation. This agreement type is particularly relevant in the UAE market where both conventional and Islamic finance principles may need to be accommodated. The document establishes the framework for loan participation, including contribution ratios, profit-sharing mechanisms, and risk allocation between parties. It ensures compliance with UAE banking regulations, including Central Bank requirements and, where applicable, Sharia principles. The agreement is essential for syndicated lending, club deals, and other multi-lender arrangements in the UAE, providing clarity on administrative responsibilities, payment mechanics, and security arrangements. It includes specific provisions addressing UAE legal requirements, local market practices, and regulatory compliance obligations.

What sections should be included in a Loan Sharing Agreement?

1. Parties: Identifies and defines all parties to the agreement, including lenders, borrowers, and any administrative agents

2. Background: Sets out the context of the agreement and the parties' intentions to enter into a loan sharing arrangement

3. Definitions: Defines key terms used throughout the agreement

4. Loan Details: Specifies the total loan amount, purpose, and sharing proportions between parties

5. Participation Mechanism: Details how the loan sharing arrangement works, including profit/loss sharing ratios

6. Payment Terms: Outlines payment schedules, profit distribution mechanism, and payment procedures

7. Rights and Obligations: Defines the rights and obligations of each party under the agreement

8. Representations and Warranties: Contains statements of fact and assurances from all parties

9. Sharia Compliance: Confirms compliance with Islamic finance principles and structures

10. Security: Details any security or collateral arrangements supporting the loan

11. Events of Default: Lists circumstances constituting default and corresponding remedies

12. Governing Law and Jurisdiction: Specifies UAE law as governing law and determines jurisdiction for disputes

13. Notices: Sets out how formal communications between parties should be made

14. Boilerplate Provisions: Standard contractual provisions including severability, entire agreement, and amendments

What sections are optional to include in a Loan Sharing Agreement?

1. Agent Provisions: Required when an administrative agent is appointed to manage the loan sharing arrangement

2. Islamic Finance Structure: Detailed section needed when the agreement follows specific Islamic finance structures like Mudaraba or Musharaka

3. Cross-Border Provisions: Required when parties are from different jurisdictions or when cross-border transfers are involved

4. Syndication Rights: Include when parties may want to syndicate their share of the loan

5. Tax Provisions: Detailed tax clauses needed when tax implications are significant or when involving international parties

6. Regulatory Compliance: Additional regulatory requirements when dealing with regulated entities or specific sectors

7. Force Majeure: Detailed provisions for unforeseen circumstances affecting loan performance

What schedules should be included in a Loan Sharing Agreement?

1. Schedule 1 - Loan Participation Details: Detailed breakdown of each party's participation percentage and contribution amount

2. Schedule 2 - Payment Schedule: Detailed payment dates, amounts, and distribution mechanics

3. Schedule 3 - Form of Transfer Certificate: Template for transferring loan participations between parties

4. Schedule 4 - Security Details: Comprehensive list and description of security or collateral

5. Schedule 5 - Conditions Precedent: List of documents and conditions required before agreement becomes effective

6. Schedule 6 - Contact Details: Contact information for all parties and authorized representatives

7. Appendix A - Calculation Methodology: Detailed explanation of how profit/loss shares are calculated

8. Appendix B - Compliance Certificates: Templates for ongoing compliance certification

9. Appendix C - Sharia Pronouncement: Sharia board approval and structure certification if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Document Type

Financing Agreement

Cost

Free to use
Relevant legal definitions















































Clauses


































Relevant Industries

Banking & Financial Services

Real Estate

Construction

Manufacturing

Trading & Commerce

Healthcare

Education

Hospitality

Infrastructure

Technology

Telecommunications

Energy & Utilities

Transportation & Logistics

Relevant Teams

Legal

Finance

Compliance

Risk Management

Treasury

Credit

Corporate Banking

Islamic Banking

Operations

Portfolio Management

Syndications

Transaction Management

Documentation

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Compliance Officer

Risk Manager

Treasury Manager

Credit Manager

Relationship Manager

Loan Officer

Investment Manager

Corporate Finance Manager

Syndication Manager

Islamic Finance Specialist

Transaction Manager

Portfolio Manager

Senior Banker

Banking Operations Manager

Financial Controller

Industries








Teams

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, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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