Is it legal for one LLC to borrow money from another LLC without interest?

Greetings.

If the company's purpose is to lend, it can do so.

Can you share the company's articles of association and contract on WhatsApp so that we can inform you correctly?

We are honored to provide you with legal support. For further inquiries about your topic, You can come to our office or contact us on WhatsApp.

Dear questioner

A clear and comprehensive loan agreement should be there between two LLCs, otherwise, if you suspect any unusual transactions or a loan is a sham then there is a need for clear evidence to establish to report them to authorities.

If you need further clarification, kindly share your Whatsapp number.

According to UAE law, it is legal for one LLC to borrow money from another LLC without interest.

However, this transaction should be properly documented and recorded in the books of both companies to avoid any suspicion of creating a fake creditor.

Thank you for your question.

Yes, one LLC can lend money to another LLC without charging interest, as there is no legal requirement to charge interest on loans between companies.

However, the terms of such a loan should be clearly documented in a written agreement to avoid any future disputes.

Regarding the suspicion of creating a fake creditor or money looping, this can be a serious issue, potentially involving fraud or misrepresentation.

If you suspect such practices, it's important to conduct a thorough audit and seek legal assistance to investigate and protect your interests.

I recommend discussing this matter in more detail to assess the situation properly and advise you on the best course of action.

Please feel free to reach out to me on WhatsApp or phone or via email to discuss this further.

Best regards,

Suhail Rana

Dear Inquirer

Lending Between Companies:

Legal Framework and Interest-Free Loans:

In the UAE, an LLC can lend money to another LLC without interest, provided that the lending is properly documented and adheres to the agreements made between the parties. There should be a clear contract outlining the terms of the loan, including the duration and repayment conditions.

Suspicions of Fake Creditors:

If there is suspicion of creating a fake creditor or "money looping," the following steps should be taken:

Document Review: Review loan documents and related contracts to verify their legitimacy.

Internal Audit: Conduct an internal audit to verify the accuracy of financial transactions.

Reporting: If you suspect fraud, report it to relevant authorities such as the Securities and Commodities Authority or the Department of Economic Development. It is best to have a lawyer present to prevent any risks that may occur

If you need further clarification, you can contact us.