Q&As

How can a director seek repayment of a loan to a limited company which was neither evidenced in writing, nor approved in a board meeting but which was verbally agreed to be payable on demand?

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Published on: 14 February 2017
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Loans to a company

The first point to make is that the Companies Act 2006 (CA 2006) does not contain any provisions dealing directly with a director making a loan to the company of which he is a director.

A director can make a loan to the company of which he is a director. When the director proposed making a loan to the company of which he is a director, the terms of the facility should have been tabled and approved at a board meeting of the directors. At that time the board would consider the terms of the loan and determine whether or not it was in the commercial interests of the company to enter into the arrangement, bearing in mind their general duties to the company, in particular CA 2006, s 172. If satisfied, the board could pass a resolution to approve the transaction

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Jurisdiction(s):
United Kingdom
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Key definition:
Loans definition
What does Loans mean?

occupational pension scheme resources may not at any time be invested in an employer-related loan. In accordance with section 40 of the Pensions Act 1995, employer-related loans are: loans to the employer or any such person; shares or other securities issued by the employer or by any person who is connected with, or an associate of, the employer; or employer-related investments eg a guarantee or security for obligations of the employer. This does not apply in respect of small self-administered schemes (SSASs) and self-invested pension plans (SIPPs).

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