Memorandum of terms of loan to director

If you need the shareholders’ consent for a loan or similar financial help that the company is planning to give to a director, you must provide them with certain details of the transaction. Use our model to make sure the shareholders have the information they need.

Financial help

Loans and similar financial help (such as the company guaranteeing or securing a loan made by a third party to a director) need shareholder consent. See our Loans to Directors Checklist for details of the full scope of this requirement.

Obtaining consent

Once you have established that you need the shareholders’ consent, you need to decide whether to do this at a meeting or by written resolution. In either case, the shareholders need enough information about the loan etc. to make their decision, and the Companies Act 2006 specifies what details should be given. Our model sets out the information required.

If the decision is to be made by written resolution, the memorandum will be sent out with the resolution. If a shareholder meeting is called, the memorandum needs to be made available at the company’s registered office for at least 15 days before the meeting, and at the meeting itself. It will usually be included in the notice calling the meeting too.