Written Resolution to approve a Guarantee

This Written Resolution to approve a Guarantee is the usual form of shareholders’ approval that is obtained where corporate benefit for the giving of a guarantee by a company is not clear.

A director of a company must act in a way he or she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole (section 172 Companies Act 2006). Each director must therefore consider the corporate benefit of giving a guarantee and whether there is appropriate justification for guaranteeing the obligations of a third party.

Corporate benefit should be set out in the board minutes approving the giving of the guarantee. Where there is any doubt regarding this, and in order to avoid the risk that the guarantee is given in breach of directors’ duties, shareholder approval should be sought.

These ordinary resolutions therefore seek to approve the terms of the guarantee and state that the shareholders’ consider the guarantee will promote the success of the company. The resolutions are set out in the form of written resolutions.

Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document. This document is in open format.

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