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Loan Notes – new templates resolving to approve their issue

October 2023

Loan Notes require a company to execute a deed constituting or creating the loan notes and then issue the loan notes to subscribers evidenced by a certificate with the conditions of the loan attached.

As part of this process, the issuing company should resolve to approve the issue of loan notes and authorise the issuing of loan note certificates. There are two ways for directors to approve matters: the first is at a board meeting and the other is by way of written resolution. Either method should result in a written document evidencing such a decision. 

This month we have therefore added both a board minute and a directors’ written resolution which may be used as alternatives in the process of approving the issue of loan notes. Both the board minutes and the written resolution record that completed forms of application for loan notes have been received and that any pre-emption rights on issue of the loan notes have been waived by existing shareholders. They both resolve to approve the loan note instrument and issue the relevant loan note certificate.

Note that before a company issues loan notes, its articles of association or other contractual arrangements (for example, financing) should be checked to establish whether there are any restrictions which limit its ability to issue loan notes.

These templates will be of use to any company secretary or company administrator in managing the mechanics of issuing loan notes.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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