Are minimum yearly repayments required?

A notional loan under a complying loan agreement forms an amalgamated loan for which minimum yearly repayments are required. Any shortfall in a minimum yearly repayment may result in a deemed dividend.

The amount of the amalgamated loan is the sum of the notional or deemed loans under complying loan agreements for the same maximum term. In determining whether or not there is a minimum yearly repayment shortfall repayments made by the target entity are treated as repayments by the target entity to the trustee for the amalgamated loan. The amount of the repayment for the purpose of calculating the shortfall is worked out using the formula:

Repayment made by target
entity to actual lender


         Amount of notional loan         
Amount actually lent to target entity

    Last modified: 15 Jul 2010QC 23183