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Debt Investment Agreement Template for United Arab Emirates

A comprehensive legal document governed by UAE law that establishes the terms and conditions for a debt investment between an investor and a borrower company. The agreement details the investment amount, repayment terms, security arrangements, and various rights and obligations of the parties involved. It incorporates UAE-specific legal requirements, including relevant provisions from UAE Commercial Law and Civil Code, and can be structured to comply with Islamic finance principles if required. The document includes essential protective measures for the investor while ensuring compliance with local regulatory requirements and business practices.

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What is a Debt Investment Agreement?

The Debt Investment Agreement is a crucial document used in the UAE when an investor provides debt financing to a company, whether for growth, working capital, or specific project funding. The agreement must comply with UAE Federal Laws, including Commercial Companies Law and Civil Code, and may need to address Islamic finance principles depending on the transaction structure. It typically contains detailed provisions on investment terms, security arrangements, representations and warranties, covenants, and events of default. The document is particularly important in the UAE context where the legal framework for debt investments combines both civil and common law principles, requiring careful consideration of local enforcement mechanisms and regulatory requirements. This agreement type is commonly used by financial institutions, investment funds, and corporate investors looking to make debt investments while maintaining appropriate security and control mechanisms.

What sections should be included in a Debt Investment Agreement?

1. Parties: Identification of the investor(s) and investee company, including registration details and addresses

2. Background: Context of the investment, including company's business and purpose of the investment

3. Definitions: Key terms used throughout the agreement

4. Investment Amount and Terms: Details of the investment amount, interest rate/profit rate, and payment terms

5. Conditions Precedent: Conditions that must be satisfied before the investment becomes effective

6. Drawdown Mechanics: Process and conditions for drawing down the investment amount

7. Repayment Terms: Schedule and mechanics of repayment, including early repayment provisions

8. Security: Details of any security or collateral provided for the investment

9. Representations and Warranties: Standard and specific confirmations from both parties

10. Covenants: Positive and negative obligations of the borrower during the investment term

11. Events of Default: Circumstances constituting default and consequences

12. Remedies: Rights and remedies available to the investor upon default

13. Governing Law and Jurisdiction: Specification of UAE law and relevant courts

What sections are optional to include in a Debt Investment Agreement?

1. Islamic Finance Compliance: Required if the investment needs to be Sharia-compliant, including relevant structure and principles

2. Conversion Rights: Include if the debt may be convertible to equity

3. Board Observer Rights: Include if investor is granted rights to observe board meetings

4. Information Rights: Detailed reporting requirements beyond standard covenants

5. Subordination Provisions: Required if there are multiple creditors and ranking needs to be established

6. Change of Control: Include specific provisions for change in company ownership

7. Tax Provisions: Required if cross-border elements or specific tax considerations apply

What schedules should be included in a Debt Investment Agreement?

1. Repayment Schedule: Detailed schedule of repayment dates and amounts

2. Form of Drawdown Notice: Template for requesting disbursement of funds

3. Security Documents: Forms of security documents, charges, or guarantees

4. Corporate Authorizations: Required corporate approvals and resolutions

5. Financial Covenants: Detailed financial ratios and thresholds to be maintained

6. Conditions Precedent Documents: List of required documents and confirmations

7. Disclosure Schedule: Exceptions to representations and warranties

8. Form of Compliance Certificate: Template for periodic compliance confirmation

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Publisher

Ƶ

Cost

Free to use

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