# SHAREHOLDERS' LOAN AGREEMENT
## Important warning
This fictional agreement is a worked example of unsecured shareholder funding for an English private company. It is not tax, insolvency, financial or investment advice. Directors must consider corporate benefit, conflicts, distributable reserves, unlawful financial assistance, related-party disclosure, solvency and directors' duties. A charge over company assets requires separate security documents and registration where applicable. The parties must check whether consumer-credit or regulated lending rules apply. The names, dates, rates, bank details and figures are fictional.
Date: 15 August 2027
Parties
(1) Rivergate Analytics Limited, company number 10192744, of 31 Canal Wharf, Birmingham B1 2LF (Borrower);
(2) Alistair Grant, of 9 Rowan Crescent, Solihull B91 2QX (Lender 1); and
(3) Nisha Kapoor, of 16 Harcourt Road, Birmingham B15 3EA (Lender 2).
## 1. Loan and purpose
The Lenders agree to make a single term loan of £120,000 to the Borrower. Lender 1 advances £72,000 and Lender 2 advances £48,000, so their participation is 60% and 40%. The money must be used for lawful working capital, a data-security audit and equipment purchases described in the budget approved by the board on 10 August 2027. It must not be paid as a dividend, used to repay a director's personal debt or transferred to an associate except in the ordinary course of business.
The Lenders will transfer their contributions to the Borrower's account ending 7721 on 18 August 2027. Receipt is deemed to occur when cleared funds are received. The Borrower confirms that its board approved this Agreement, that the directors considered its interests and that the information supplied to the Lenders is materially accurate as at the date of signing.
## 2. Interest and accounting
Interest accrues on the outstanding principal at a fixed rate of 8% per year, calculated daily on the basis of a 365-day year. It is simple interest and does not compound. Interest begins on the date cleared funds are received and is payable quarterly in arrears. If the full £120,000 is outstanding for 92 days from 18 August to 18 November 2027, the interest for that period is £120,000 × 8% × 92/365 = £2,419.73, rounded to the nearest penny.
The Lenders share interest and principal payments in the same 60:40 ratio. Thus the first illustrative quarterly interest payment of £2,419.73 is £1,451.84 to Lender 1 and £967.89 to Lender 2. Rounding differences are added to the final payment. No fee or default interest may exceed a lawful amount. The Borrower must withhold tax only where legally required and must provide evidence of withholding.
## 3. Repayment schedule
The Borrower must pay principal in twelve equal quarterly instalments of £10,000, first due on 18 November 2027 and then on the 18th day of each February, May, August and November. The final scheduled principal payment is due on 18 August 2030. Interest on the reducing balance is due with each principal instalment. The parties acknowledge that the first four principal instalments are:
* 18 November 2027: £10,000 principal, leaving £110,000; * 18 February 2028: £10,000 principal, leaving £100,000; * 18 May 2028: £10,000 principal, leaving £90,000; and * 18 August 2028: £10,000 principal, leaving £80,000.
The remaining eight instalments of £10,000 reduce the balance successively to £70,000, £60,000, £50,000, £40,000, £30,000, £20,000, £10,000 and £0 on 18 August 2030. If interest is calculated for each 92-day quarter at 8% on the opening balance, the first four illustrative interest amounts are £2,419.73, £2,218.08, £2,016.44 and £1,814.79; the exact amount is adjusted for actual days. Payments apply first to enforcement costs, then accrued interest and then principal.
The Borrower may prepay all or part of the loan on 10 Business Days' notice without a premium. A partial prepayment must be at least £10,000 and reduces the final instalments unless the Lenders agree another allocation. Accrued interest to the prepayment date remains payable.
## 4. Representations and undertakings
The Borrower represents that it is incorporated and has power to borrow, this Agreement is binding when executed, entering it does not breach its articles or another material agreement, and no insolvency process has begun. It must maintain its registered status, books and insurance, pay taxes when due, keep the Lenders informed of a material claim or data breach, and give quarterly management accounts within 30 days after each quarter.
Without Lenders holding at least 75% of the outstanding principal consenting in writing, the Borrower must not grant security ranking ahead of this loan except ordinary-course purchase-money security, declare a dividend while an amount is overdue, dispose of substantially all its undertaking, or borrow more than £50,000 outside the approved budget. This is a contractual covenant and does not create a charge or priority over another creditor.
## 5. Subordination and shareholder status
The Lenders agree that, while the Borrower is solvent, payments may be made under this Agreement in accordance with the schedule. If an insolvency office-holder reasonably requires, the Lenders will not demand or receive repayment in preference to creditors with mandatory priority. Any shareholder right to vote, receive dividends or inspect records remains separate from the debt and does not set off against it.
No Lender may assign its debt to a competitor of the Borrower without the Borrower's consent, not to be unreasonably withheld. A transferee must sign a deed of adherence. The Borrower may not assign its obligations without both Lenders' consent.
## 6. Default
An Event of Default occurs if a payment remains unpaid for five Business Days after due date; the Borrower materially breaches a covenant and fails to remedy it within 15 Business Days after notice; a representation is materially false; the Borrower stops or threatens to stop business; an insolvency process begins; or a judgment debt over £25,000 remains unpaid for 20 Business Days. The Lenders must act proportionately and give notice where a cure period applies.
Following an Event of Default, Lenders holding at least 75% of outstanding principal may declare all outstanding principal, accrued interest and reasonable enforcement costs immediately due. Each Lender may then recover its proportionate share. Default interest, if demanded, is 2% per year above the ordinary rate and runs only on overdue sums from the end of the cure period to payment, subject to law and no double recovery.
The Borrower must reimburse reasonable documented legal costs caused by a default, but not costs that are unreasonable, duplicated or caused by the Lenders' negligence. Nothing limits liability for fraud or anything that cannot lawfully be limited.
## 7. Information, confidentiality and notices
Each party must keep the Borrower's non-public information confidential and may disclose it to professional advisers, insurers, HMRC, Companies House, a regulator or a court where necessary. Personal data must be processed lawfully and securely. Notices must be in writing and sent by hand or first-class post to the addresses above, or by email to an email address notified in writing for notices; a notice of acceleration must also be sent by first-class post. Email is deemed received on the next Business Day if no delivery failure is reported.
## 8. General and governing law
No amendment, waiver or release is effective unless in writing and signed by the Borrower and Lenders holding at least 75% of the outstanding principal, except an amendment that increases a Lender's obligations or reduces its share, which requires that Lender's consent. A delay in enforcing a right is not a waiver. If a provision is invalid, it is modified to the minimum extent necessary and the remainder continues.
This Agreement is the entire agreement about this loan and supersedes the 1 August 2027 heads of terms. It is governed by the law of England and Wales, and the courts of England and Wales have exclusive jurisdiction.
## Schedule 1 — payment table
Original principal: £120,000. Lender 1: £72,000 (60%). Lender 2: £48,000 (40%). Twelve principal instalments: 12 × £10,000 = £120,000. Due dates: 18 November 2027; 18 February, 18 May and 18 August 2028; 18 November 2028; 18 February, 18 May and 18 August 2029; 18 November 2029; 18 February, 18 May and 18 August 2030. The last balance after the twelfth £10,000 payment is £0. Interest varies with actual days and outstanding balance and is not included in the £120,000 principal total.
## Signatures
Signed for Rivergate Analytics Limited: ____________________ Name: Alistair Grant, Director Date: ____________________
Signed by Alistair Grant personally: ____________________ Date: ____________________
Signed by Nisha Kapoor personally: ____________________ Date: ____________________