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ORDINARY RESOLUTION - QUASI-LOANS TO DIRECTORS

Under the Companies Act 2006 a public company, or a company associated with a public company cannot make a quasi-loan to a director of the company or of its holding company; or give a guarantee or provide security in connection with a quasi-loan made by any person to such a director unless the transaction has been approved by Ordinary Resolution of the members of the company.

 

A quasi-loan is a transaction under which one party (the creditor) agrees to pay, or pays a sum for another (the borrower) or agrees to reimburse, or reimburses expenditure incurred by another party for another (the borrower) on terms that the borrower will reimburse the creditor.

 

This Ordinary Resolution - Quasi-loans to Directors template shall be used in order for a company to have the authority to make a quasi-loan to a director and/or provide a guarantee in relation to a quasi-loan made to a director of the company.

 

Before the Ordinary Resolution approving the quasi-loan can be passed a memorandum stating the nature of the transaction, the amount of the quasi-loan, the purpose for which it is required and the extent of the company’s liability under any transaction connected with the quasi-loan must be made available to the members of the company. The memorandum must be made available for inspection by members of the company  both at the company’s registered office for not less than 15 days ending with the date of the meeting, and at the meeting itself.

 

Please note that if the company makes a quasi-loan or provides a guarantee or security in connection with a quasi-loan made to a director of its holding company then the actual transaction must also have been approved by Ordinary Resolution of the members of the holding company.

 

This Ordinary Resolution is fully compliant with the provisions of the Companies Act 2006.



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