Introduction to this document

Written resolution to approve loan to a director

The shareholders’ consent is required for loans to a director, and similar financial help. In most cases, a written resolution will be the easiest way of doing so.

Shareholder approval

If a company decides to loan a director money over a certain amount, shareholder consent is required. The requirement also applies to similar financial help that exposes the company to financial liability, such as providing a guarantee or other security for a loan made by someone else to its director, as well as loans etc. to directors of the company’s holding company.

See our Loans to Directors Checklist for the types of loan that trigger the requirement for consent and an overview of the process.

Using a written resolution

A written resolution is usually the most efficient way of obtaining shareholder consent, so our model takes that form. Private companies can use the written resolution procedure set out in the Companies Act 2006, or an alternative procedure set out in their articles. Our model resolution follows the statutory procedure. If your company’s articles set out an alternative procedure, you can adapt the model as necessary.

See our Written Resolution Procedure model for an explanation of the procedure itself. The model can be adapted for use at a meeting if preferred.

An ordinary resolution is usually required to approve a loan, but check your articles as they may call for a higher majority or unanimity.

The resolution must be accompanied by a notice setting out some basic details of the loan or other financial help. See our model Memorandum of Terms of Loan to Director.