Reading: Two brothers, directors of a private limited company, need a loan of â‚¹15 lakhs for their business. They’ve offered a stake in their company instead of interest, with a personal guarantee to repay the principal after a year. They also want to give additional equity for services provided in building an app. How should a termsheet be drafted for this arrangement? Is this agreement legally sound under Indian law?

Two brothers, directors of a private limited company, need a loan of â‚¹15 lakhs for their business. They’ve offered a stake in their company instead of interest, with a personal guarantee to repay the principal after a year. They also want to give additional equity for services provided in building an app. How should a termsheet be drafted for this arrangement? Is this agreement legally sound under Indian law?

Last updated: August 25, 2025 1:04 pm

Apni Law

1 year ago

Law Forum › Category: Corporate › Two brothers, directors of a private limited company, need a loan of â‚¹15 lakhs for their business. They’ve offered a stake in their company instead of interest, with a personal guarantee to repay the principal after a year. They also want to give additional equity for services provided in building an app. How should a termsheet be drafted for this arrangement? Is this agreement legally sound under Indian law?

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Apni Law Staff asked 1 year ago

Two brothers, directors of a private limited company, need a loan of â‚¹15 lakhs for their business. They’ve offered a stake in their company instead of interest, with a personal guarantee to repay the principal after a year. They also want to give additional equity for services provided in building an app. How should a termsheet be drafted for this arrangement? Is this agreement legally sound under Indian law?

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Apni Law Staff answered 1 year ago

The termsheet should clearly define the equity stake offered for the loan, the timeframe for repayment, the personal guarantee’s terms, and the equity allocation for app development services. This agreement is legally sound under Indian law as long as it’s transparent, contains clear clauses for all parties, and adheres to company and securities laws.