Loans to directors
The Companies Act permits a company to make a loan to a director. A loan or guarantee must be approved by a resolution of the members of the company. A resolution giving the necessary approval can only be passed when a memorandum setting out required matters about the loan is made available to the members.
Information to be included in the memorandum:
- The nature of the transaction
- The amount of the loan and its purpose
- The extent of the company's liability under any transaction connected with the loan
There are some exceptions to the requirement to gain member approval including loans where the aggregate value does not exceed £10,000, or where this relates to a credit transaction, if applicable, does not exceed £15,000 or is entered into in the ordinary course of the company's business.
Info Zone
- Business
- Selling your business
- Starting a business
- Limited companies
- Forming a limited company
- Pros and cons of limited companies
- Buying a company 'off the shelf'
- Tax and the company car
- Company bonus or dividend?
- Tax saving strategies
- The tax system for companies
- Companies Act 2006
- Accounting records
- An historical record of the key changes
- Appointment of directors
- Changing the company name
- Choosing a name for your company
- Do you need an audit?
- Filing of accounts and late filing penalties
- Registered office
- Related director agreements
- Shares and share capital
- A company's members
- A more in depth look at the act
- An auditor's rights to information
- Appointment of auditors
- Directors transactions requiring members approval
- Directors' liabilities
- Directors' report
- Directors' service contracts
- Financial year
- General duties of directors
- Group accounts
- Loans to directors
- Records of directors meetings
- Signing of accounts: directors and auditors
- Forming a limited company
- Companies House - forms you need to know about
- Interest and tax payments
- The law and directors' responsibilities
- Statutory records
- The company secretary
- Getting the company struck off
- Running your business
- Partnerships
- Your employees
- Personal
- Tax
- Calculators
- Publications and Factsheets
- Business News