Directors’ Loan Agreements - Company to Director and Director to Company

Directors' Loan Agreements

Directors can be involved in loans with companies either because a company makes a loan to one of its directors or because a director may make a loan available to the company that he or she is a director of.

Loans to Directors

Companies can make loans to its directors without seeking approval from its shareholders as long as the aggregate value of the loan(s) is below £10,000. Otherwise there are very strict legal criteria governing the giving of loans to directors.

Loans from directors

There is much less criteria involved governing the terms on which a director may lend to a company of which he/she is a director. This is more like any commercial lending relationship. However there are still legal matters to consider and that may need approval.

To cover both these scenarios, this sub-folder contains:

• a Guidance Note – Loans involving Directors, which explains the legal issues involved when there is any lending involving directors and companies;
• secured and unsecured loan agreements which record the terms of a loan given to a director of a company or a person connected with a director (these agreements should only be used where the aggregate value of the loan is below £10,000 so that shareholder approval is not required);
• a Directors’ loan secured over joint property;
• guidance on land registry applications relating to a directors’ secured loan;
• a Shareholders’ Ordinary Resolution approving a loan to a Director or acting as a Guarantor for a Director (this is to be used for transactions which require the approval of the members); and
• a long form and basic form of directors’ loan agreement covering the usual commercial terms on which a director may lend to a company.

Each document in the Directors Loan Agreements Sub-folder is compliant with the Companies Act 2006.

Directors Loan Agreements are part of the Corporate folder. Access all Corporate documents for £35+VAT.