Director’s loan agreement

A director shareholder doesn’t have to sign a loan agreement when they borrow money from their company. The terms of borrowing can be agreed orally or just implied. However, in certain situations a director is required by company law to obtain permission from the shareholders prior to borrowing company money.

Get it in writing

Shareholder approval (generally by ordinary resolution) is only required for directors’ loans in excess of £10,000 (the limit is £50,000 if the loan is to meet expenditure on company business). But in all situations where a company lends money to a director we recommend that a written agreement setting out the key terms should be drawn up. Apart from anything else it will help prove the existence of a loan where HMRC makes enquiries.

Use and modify as needed our sample loan agreement for all company to director loans.