Guidance Notes: Loans Involving Directors

This Guidance Note: Loans involving Directors is a practical guide for private companies on (1) loans and guarantees made by a company to a director and (2) the issues to consider where a director (or shareholder) makes a loan to the company.

What This Guidance Note Covers

It discusses the key legislative rules (primarily under the Companies Act 2006) that apply to loans and guarantees involving directors, including when shareholder approval is required and when exceptions may apply.

It also covers:

• Loans involving connected persons
• Loans from directors (or shareholders) to a company
• Substantial property transactions
• Conflicts of interest

Who This Is For

It is a useful aide-memoire for company directors and company secretaries who need a clear overview of the issues to consider before documenting a director-related loan.

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