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

This Ordinary Resolution Allowing a Company to Give a Guarantee for a Director’s Loan shall be used in order to confer the authority to the company to give a guarantee or provide security in connection with a loan made by any person to a director.

Before the Ordinary Resolution approving the guarantee can be passed a memorandum stating the nature of the transaction, the amount of the loan, the purpose for which it is required and the extent of the company’s liability under any transaction connected with the 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 provides a guarantee or security in connection with a 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 template is fully compliant with the provisions of the Companies Act 2006.