Can a company lend money to another company in the UAE? In some cases, yes, but lending as a business requires a Central Bank license. Federal Decree-Law 6/2025 lists licensed financial activities in Article 61.
Quick Answer
A company may be able to lend money to another company in the UAE, but the arrangement must be assessed against the Central Bank’s financial activity licensing requirements. Operating a lending business without the required license can result in criminal penalties.
A one-off shareholder or intra-group loan is different from carrying on lending as a business, although that distinction does not establish an automatic exemption. Companies should check their corporate powers, approvals, loan structure and any applicable financial regulations.
For commercial loans, the contractual interest rate and repayment provisions matter. A written agreement should specify the amount, interest, term, repayment obligations, default terms and any security.
Can a company lend money to another company in the UAE? Licensing and interest
| Topic | Applicable rule |
|---|---|
| Licensed activities | Financial activities subject to Central Bank licensing are listed in Article 61 and its regulations (Central Bank Law, Arts 1, 61). |
| Unlicensed activity | Unlicensed activity under Article 61(1) can lead to imprisonment and a fine, or either penalty. The fine ranges from AED 50,000 to AED 500,000,000 (Central Bank Law, Article 170). |
| Interest on a commercial loan | The creditor can charge the rate in the contract. If none is set, the market rate applies, up to 9% a year (Commercial Transactions Law, Art 72). |
| Late payment | If a rate is agreed and the debtor is late, delay interest runs at the agreed rate until payment (Art 73). |
| Court practice on default interest | The Dubai Court of Cassation’s General Assembly reduced the default rate courts apply, where no rate is agreed, from 9% to 5% a year (Appeal 1/2021). |
| Early repayment | If the loan has a fixed term, the creditor need not accept early repayment unless the interest for the remaining term is paid, unless agreed otherwise (Art 75). |
Planning a Loan Between Two UAE Companies?
Before transferring funds, discuss the loan structure, Central Bank licensing considerations and contractual obligations with Leaders Advocates.
Points to check before lending
- Whether the loan is a one-off funding arrangement within a group or a repeated activity that looks like a lending business.
- Whether the lending company’s license and memorandum allow it, and which approvals its documents require.
- Whether either company is in a free zone with its own rules, such as the DIFC or ADGM.
- Tax and transfer-pricing treatment, which this guide does not cover.
Important: A One-Off Loan Is Not an Automatic Licensing Exemption
The distinction between an occasional intercompany funding arrangement and a regulated lending business requires a review of the actual activity. A company’s trade license, constitutional documents and the frequency and purpose of its lending arrangements may all be relevant. Do not assume that describing a transaction as an intercompany loan resolves the licensing question.
Unsure Whether Your Company Needs a Lending License?
A one-off business loan and regular lending activity may require different legal assessments. Discuss your company’s planned transactions, license and corporate structure with Leaders Advocates.
Steps to document a company loan
- Confirm the purpose and that it is not a lending business needing a license.
- Obtain the approvals each company’s documents require.
- Sign a written loan agreement with the amount, term, interest, repayment and default terms.
- Take security where needed, such as a guarantee or pledge.
- Keep records of the transfer and each repayment.
Company Loan Documentation Checklist
Before signing or transferring funds, consider whether the following records are available:
- The companies’ trade licenses and constitutional documents.
- Corporate resolutions or other required approvals.
- A written agreement identifying the lender, borrower and loan amount.
- Interest, maturity, repayment and default provisions.
- Security documents, where guarantees or pledges are agreed.
- Bank transfer confirmations and repayment records.
Need to Draft or Review an Intercompany Loan Agreement?
Discuss corporate approvals, interest provisions, repayment terms, default remedies and security arrangements before committing to a business loan.
If you are planning a loan between companies, you can send us the details on WhatsApp.
Frequently Asked Questions
Related reading
Legal sources
Need Legal Help With a Company-to-Company Loan in the UAE?
Leaders Advocates can discuss intercompany lending arrangements, licensing considerations, corporate approvals, commercial loan agreements and repayment disputes. The legal position depends on the nature of the transaction, the companies involved and applicable UAE regulations.
