Directors' Loan Agreements

Directors can be involved in loans with their company in two main ways:

the company makes a loan to a director (or a person connected with a director); or
a director makes a loan to the company.

There are specific legal requirements where a company lends to a director, particularly once the total value of the loans exceeds £10,000. Loans from a director to the company are closer to a standard commercial lending arrangement, but still raise legal and governance issues.

This Directors’ Loan Agreements section brings together:

guidance on the legal framework for loans involving directors;
secured and unsecured loan agreements where the company lends to a director or connected person (for use only where the aggregate loan value is below £10,000 so that shareholder approval is not required);
documents for loans secured over joint property and related Land Registry applications;
shareholder approval documents (resolution and memorandum) for loans to directors and guarantees requiring approval under section 197 Companies Act 2006; and
long-form and basic-form loan agreements where a director lends to the company.

Each document in the Directors’ Loan Agreements section is compliant with the Companies Act 2006.

When To Use These Templates

Use these templates when you are:

documenting a loan from the company to a director or a person connected with a director, where the aggregate value is below £10,000;
putting in place security, including over joint property, in connection with a director’s loan;
seeking shareholder approval for the company to make a loan to a director or to act as a guarantor for a director under section 197 CA 2006;
preparing the memorandum required under section 197(4) CA 2006 for members to consider before approving the transaction;
documenting a loan from a director to the company on either a basic or detailed commercial basis;
understanding the legal issues that arise whenever directors are involved in lending arrangements with the company.

📁 Templates In This Section

Guidance

Guidance Notes: Loans Involving Directors

Loans to directors and connected persons (company as lender)

Shareholder approval and memorandum (s.197 CA 2006)

Loans from directors to the company (company as borrower)

🔀 Document Toolkit: Typical Sequence (may vary)

Identify whether the company is lending to a director (or connected person) or the director is lending to the company, and whether any approval is needed.
For loans to directors below £10,000 in aggregate, select the appropriate secured or unsecured Director’s Loan Agreement and, if relevant, the joint property and Land Registry guidance.
Where shareholder approval is required under section 197 CA 2006, prepare the Memorandum of Terms of Loan to Director and seek approval using the Shareholders’ Ordinary Resolution for Approving Loan to a Director or Acting as Guarantor for a Director.
For loans from a director to the company, choose either the long-form or basic loan agreement and agree the commercial terms.
Keep signed agreements, resolutions, memoranda and any Land Registry or Companies House filings with the company’s statutory and financial records.

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