Directors’ meeting
to raise finance: draft minutes

Company law and good management determine the need for a directors’ resolution to approve the raising of a bank loan. In practice the bank will insist on this formal documentation.

Advice

Entering into a borrowing commitment is an important issue and requires the directors’ formal approval as the bank will present a document placing obligations on the company.

It’s important to check the articles of association of the company as some transactions require shareholder approval, e.g. purchase of land and buildings. The articles may have been drafted at the time a “shell” company was formed and customised in some way.

Beware

Checking the correct level of approval has been applied ensures the legality of the transaction.

Tip

The minutes should be recorded promptly after the meeting and signed by the chairman.