Free Shareholder Loan Agreement

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Shareholder Loan Agreement

Frequently Asked Questions
What is a Shareholder Loan Agreement?A Shareholder Loan Agreement is an enforceable agreement where a shareholder of a company is lending money to that company.When should I use a Shareholder Loan Agreement?Use a Shareholder Loan Agreement when you want a legally enforceable agreement that lays out the terms of a loan, such as the amount, payment terms, or other conditions.

Your Shareholder Loan Agreement

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THIS SHAREHOLDER LOAN AGREEMENT (this "Agreement") dated this ________ day of ________________, ________


_______________________________ of __________
(the "Shareholder")



_______________________________ of __________
(the "Corporation")



  1. The Corporation is duly incorporated in the Australian Capital Territory.
  2. The Shareholder holds shares in the Corporation and agrees to loan certain monies to the Corporation.

IN CONSIDERATION OF the Shareholder providing the Loan to the Corporation, and the Corporation repaying the Loan to the Shareholder, both parties agree to keep, perform, and fulfill the promises, conditions and agreements below:

  1. Loan Amount & Interest
  2. The Shareholder promises to loan _______________________ ($ ____________) AUD to the Corporation (the "Loan") and the Corporation promises to repay this principal amount to the Shareholder at such address as may be provided in writing, with interest payable on the unpaid principal at the rate of __________ percent per annum, calculated yearly not in advance.
  3. Payment
  4. The Loan is repayable in full on 15 June 2024.
  5. At any time while not in default under this Agreement, the Corporation may pay the outstanding balance then owing under this Agreement to the Shareholder without further bonus or penalty.
  6. Default
  7. Notwithstanding anything to the contrary in this Agreement, if the Corporation defaults in the performance of any obligation under this Agreement, then the Shareholder may declare the principal amount owing under this Agreement at that time to be immediately due and payable.
  8. Further, if the Shareholder declares the principal amount owing under this Agreement to be immediately due and payable, and the Corporation fails to provide full payment, interest in the amount of __________ percent, calculated yearly not in advance, will be charged on the outstanding amount, commencing the day the principle amount is declared due and payable, until full payment is received by the Shareholder.
  9. Governing Law
  10. This Agreement will be construed in accordance with and governed by the laws of the Australian Capital Territory.
  11. Costs
  12. All costs, expenses and expenditures including, and without limitation, the complete legal costs incurred by enforcing this Agreement as a result of any default by the Corporation, will be added to the principal then outstanding and will immediately be paid by the Corporation.
  13. Assignment
  14. This Agreement will pass to the benefit of and be binding upon the respective heirs, executors, administrators, successors and assigns of the Corporation. The Corporation waives presentment for payment, notice of non-payment, protest, and notice of protest.
  15. Amendments
  16. This Agreement may only be amended or modified by a written instrument executed by both the Corporation and the Shareholder.
  17. Severability
  18. The clauses and paragraphs contained in this Agreement are intended to be read and construed independently of each other. If any part of this Agreement is held to be invalid, this invalidity will not affect the operation of any other part of this Agreement.
  19. General Provisions
  20. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
  21. Entire Agreement
  22. This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or otherwise.

IN WITNESS WHEREOF, the parties have duly affixed their signatures under hand and seal on this ________ day of ________________, ________



Per: ___________________________ (Seal)



Last Updated February 29, 2024

Reviewed by 


Fact checked by 

What is a Shareholder Loan Agreement?

A Shareholder Loan Agreement documents a private loan from a shareholder or stockholder to a company. Use a Shareholder Loan Agreement to create an enforceable agreement between two related parties when:

  • A shareholder is lending money to its corporation.
  • A corporation owes money to a shareholder (for salary, etc.), and the parties need a record of the payment for tax purposes.

A Shareholder Loan Agreement is also known as a:

  • Stockholder loan agreement
  • Shareholder loan to a corporation
  • Shareholder loan to a company
  • Shareholder loan
  • Director’s loan
  • Director loan to a company

Who are the parties to a Shareholder Loan Agreement?

The two parties to a Shareholder Loan Agreement are the shareholder and the corporation.

The shareholder (or stockholder) is the party that lends money to the corporation on the condition that the corporation will repay the loan in the future. To be a shareholder, this party must own shares in the corporation. The shareholder is the same as a debtor or lender.

The corporation is the party that borrows money from the shareholder on the condition that they will repay the money in the future. If the corporation liquidates, then they must pay all loans (including shareholder loans) before the shareholders can recover any equity from their shares.

How do I create a Shareholder Loan Agreement?

Our free Shareholder Loan Agreement template clearly outlines the steps required to complete a legal document that's valid in your state or territory. Complete the questionnaire by following these steps:

1. Determine how the corporation will make payments

Start by determining how the corporation plans on paying back the loan. The corporation can choose to pay:

  • A lump-sum payment at the end of the term
  • Periodic payments with the balance owing at the end of the term
  • Regular payments, including interest
  • Interest payments during the term and pay the loan back after the term

2. State the term length

The term is the period over which the loan is outstanding. At the end of the term, the corporation should have repaid the loan and any accrued interest. You can choose that the corporation to repay the loan:

  • On a specific date
  • Upon notice from the shareholder to repay
  • After a selected number of months
  • After a selected number of years

Specify if the corporation can pay the outstanding principal amount without penalty. This ability allows the corporation to pay down the principal at any time without having to pay an additional sum as a penalty. Typically, a corporation can repay the outstanding balance early without penalty.

3. Specify the loan amount

State the amount that the shareholder is lending to the corporation.

If applicable, you will also need to determine the interest percentage. Interest is an amount charged to the corporation for the use of the shareholder's money. Express this number as a percentage of the amount borrowed.

Interest can also compound monthly or yearly. Compounded refers to how frequently the interest is calculated and added to the principal amount of the loan. The more often interest compounds, the more interest the corporation will pay to the shareholder.

If you would like to create an interest-free loan from a shareholder to a company, list the interest amount as zero.

4. Determine the payment details

If the corporation is making payments, determine if it will pay yearly, monthly, or weekly and specify a payment due date. You can also include an address where the company can send the payments.

5. Provide both parties’ information

Include the name and address, including city, street, state or territory, and postcode, for the shareholder and corporation.

6. Address miscellaneous matters

There are a few additional details to address before finalizing the agreement, including collateral and default.


If the shareholder decides to secure the loan by requesting collateral from the corporation, describe the collateral (e.g., all motor vehicles owned by the corporation).

Securing the loan with collateral allows the shareholder to receive compensation if the corporation fails to make repayments. It’s useful in cases where there is a high risk the corporation will default, or the loan is large.

If there isn’t collateral and the corporation doesn’t pay, the shareholder will need to go to court before seizing any of the corporation’s assets.


If the corporation fails to repay the loan according to the terms set out in the Shareholder Loan Agreement, the loan goes into default. Typically, a default will result in the corporation receiving a penalty and the loan being immediately due.

Determine if there will be an increased interest rate if the company fails to make payments, and specify the default interest rate.

Additional terms

If your agreement needs contractual terms that the questionnaire hasn’t addressed, you can list them under this section in our Shareholder Loan Agreement template.

Make sure not to address or contradict an issue previously answered in the questionnaire, and don’t abbreviate words.

7. Sign the document

To finalize the agreement, both parties must sign it. If you know when the parties will sign the document, provide the exact date.

Most documents and contracts don’t require witness signatures to be legally valid. However, some documents have requirements regarding witnesses.

Many banks and other institutions have policies about signing requirements and may refuse to accept documents without witness signatures regardless of their legal sufficiency. If a bank or registry will use your document, check with them regarding any additional witnessing requirements.

Is a Shareholder Loan Agreement taxable?

Yes. If a corporation wishes to avoid paying taxes on a loan, it should return the principal amount of a loan to the shareholder by the end of the fiscal year.

Related Documents:

  • Corporate Guarantee: Allow a corporate guarantor to take on responsibility for another individual or corporation’s debt in case they default on a debt to a third party.
  • Indemnity Agreement: Protect yourself from unforeseen liabilities, losses, claims, or damages throughout a party’s involvement in a particular activity.
  • Letter of Intent: Create a non-binding letter to detail an understanding of a future agreement.
  • Promissory Note: Create an enforceable agreement for a borrower to pay back money loaned by a lender.
  • Share Purchase Agreement: Outline the details of a share purchase between an individual or corporation and another shareholder of a corporation.
  • Shareholder Agreement: Create a contract between a shareholder and a corporation that details the shareholder's rights and responsibilities, share valuation, and more.
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Shareholder Loan Agreement

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