Director Loans – Company Loan to Director & Director Loan 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 may make loans to their directors without seeking approval from their shareholders as long as the aggregate value of the loan(s) is below £10,000. Otherwise there are 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 other commercial lending relationship. However there are still legal matters to consider and approval may be required.

To cover both these scenarios, this subfolder 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 to approve a company making a loan to a director or acting as a guarantor for a director (section 197 of the Companies Act 2006);
  • a Memorandum in accordance with section 197(4) of the Companies Act 2006, containing the details of the transaction for the members to consider before approving the above ordinary resolution; 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.

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