8.6 Loans to directors

LOANS TO DIRECTORS

Section 164 renders illegal all loans by a company to any person who is its director or director of its holding company and neither can the company give or provide security in connection with a loan made to any of its directors, unless the transaction has been approved by a resolution of the members of the company.

If the director is a director of the company’s holding company, the transaction also needs to have been approved by a resolution of the members of the holding company.

Matters to be disclosed

• The nature of the transaction
• The amount of the loan and the purpose for which it is required
• The extent of the company’s liability in relation to the loan