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Loan Guarantee Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Loan Guarantee Agreement

"I need a Loan Guarantee Agreement under UAE law for a parent company guaranteeing a AED 10 million commercial loan to its subsidiary, with specific provisions for multiple drawdowns throughout 2025 and Islamic finance compliance requirements."

Document background
The Loan Guarantee Agreement is a critical security document used in UAE financing transactions when a third party (guarantor) agrees to secure the debt obligations of a borrower. This document is essential in both conventional and Islamic financing structures and must comply with UAE Federal Law No. 5 of 1985 (Civil Code), particularly Articles 1057-1092 governing guarantees. The agreement is commonly used in corporate financing, real estate development, trade finance, and project financing scenarios. It includes detailed provisions on the scope of the guarantee, enforcement mechanisms, guarantor's obligations, and specific requirements under UAE law. The document typically addresses both local law requirements and international banking practices, making it suitable for both domestic and cross-border transactions. The agreement must be carefully structured to ensure enforceability under UAE law and may need to consider Sharia compliance depending on the nature of the transaction.
Suggested Sections

1. Parties: Identification of the Guarantor, Lender (Beneficiary), and Principal Debtor, including full legal names and addresses

2. Background: Context of the guarantee, reference to the principal loan agreement, and purpose of the guarantee

3. Definitions: Definitions of key terms used throughout the agreement, including 'Guaranteed Obligations', 'Security', 'Event of Default', etc.

4. Guarantee and Indemnity: Core provisions detailing the guarantee obligations, including the scope, limitations, and nature (conditional/unconditional) of the guarantee

5. Representations and Warranties: Guarantor's confirmations regarding their capacity, authority, and financial condition

6. Payment Mechanics: Details of how and when payments must be made, currency provisions, and payment priorities

7. Enforcement and Rights: Lender's rights upon default, enforcement mechanisms, and remedies available

8. Duration and Release: Term of the guarantee and conditions for its release or termination

9. Communications: Notice provisions and communication requirements between parties

10. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction for disputes

Optional Sections

1. Islamic Finance Compliance: Required when the guarantee needs to be Sharia-compliant, including relevant provisions and structure

2. Security Provisions: Include when additional security is being provided alongside the guarantee

3. Corporate Authorizations: Required when the guarantor is a corporate entity, detailing corporate approvals obtained

4. Tax Provisions: Include when cross-border elements exist or specific tax implications need to be addressed

5. Currency Provisions: Required when the guarantee involves multiple currencies or currency conversion rights

6. Assignment and Transfer: Include when rights under the guarantee may need to be assigned or transferred

7. Multiple Guarantors: Required when there are multiple guarantors, addressing joint and several liability

Suggested Schedules

1. Principal Loan Agreement: Copy or key terms of the underlying loan agreement being guaranteed

2. Guarantee Limit Schedule: Details of any caps or limitations on the guarantee amount

3. Form of Demand: Template for making a demand under the guarantee

4. Corporate Authorizations: Copies of relevant board resolutions, powers of attorney, or other authorizations

5. Security Documents: If applicable, details of any additional security or collateral provided

6. Payment Schedule: If applicable, schedule of guaranteed payments or repayment terms

7. Conditions Precedent Documents: List and copies of required documents to be provided before the guarantee becomes effective

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions


















































Clauses



































Relevant Industries

Banking & Financial Services

Real Estate & Construction

Manufacturing & Industrial

Trading & Commerce

Healthcare

Hospitality & Tourism

Technology & Telecommunications

Energy & Utilities

Transportation & Logistics

Retail

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Banking

Credit Administration

Islamic Banking

Corporate Secretarial

Security & Documentation

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Banking Manager

Credit Risk Manager

Compliance Officer

Treasury Manager

Financial Controller

Company Secretary

Risk Officer

Senior Loan Officer

Corporate Banking Manager

Islamic Banking Specialist

Security Documentation Officer

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

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