Document background
The Intercompany Loan Agreement is a crucial document for corporate groups operating in or through Hong Kong, facilitating internal financing arrangements between related entities. It is commonly used when one group company has excess funds to lend to another group company requiring financing for operations, expansion, or other corporate purposes. The agreement must comply with Hong Kong's regulatory framework, particularly the Companies Ordinance, transfer pricing rules, and tax regulations. Key considerations include maintaining arm's length terms, documenting appropriate interest rates, establishing clear repayment terms, and ensuring proper corporate authorizations. The agreement typically includes comprehensive provisions addressing tax implications, security arrangements (if any), and events of default, while reflecting the related-party nature of the transaction.
