The Board Resolution For Loan To Director is a crucial corporate governance document used in South African companies when providing financial assistance to directors. This document becomes necessary when a company intends to provide a loan to a director, requiring compliance with Section 45 of the Companies Act 71 of 2008. It must demonstrate that the company has passed the solvency and liquidity test, obtained necessary shareholder approvals, and properly documented the board's decision-making process. The resolution typically includes loan terms, statutory compliance confirmations, and necessary declarations of interest. It serves as evidence of proper corporate governance and provides protection for both the company and its stakeholders by ensuring transparency and regulatory compliance in related party transactions.
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1. Title and Date: Formal title of the resolution and date of the meeting
2. Company Details: Full registered name of the company, registration number, and registered address
3. Present Directors: List of directors present at the meeting and confirmation of quorum
4. Chairman: Identification of the appointed chairman for the meeting
5. Notice and Quorum: Confirmation that proper notice was given and quorum requirements were met
6. Background: Context of the proposed loan, including purpose and business rationale
7. Declarations of Interest: Record of the recipient director's disclosure of personal financial interest and recusal from voting
8. Solvency and Liquidity Test: Confirmation that the company has satisfied the solvency and liquidity test as required by Section 45 of the Companies Act
9. Resolution Terms: Specific terms of the loan including amount, interest rate, repayment terms, and security (if any)
10. Statutory Compliance: Confirmation of compliance with relevant sections of the Companies Act and other applicable laws
11. Authorization: Express authorization for designated officers to execute necessary documents
12. Closure: Formal closing of the resolution with signature provisions
1. Special Resolution Reference: Reference to shareholder special resolution authorizing financial assistance - required if not previously obtained
2. Security Details: Include if the loan is to be secured by any assets or guarantees
3. Tax Considerations: Section addressing tax implications and compliance requirements - include if there are specific tax structures or considerations
4. Related Party Provisions: Additional provisions required for group companies or related party considerations
5. Performance Conditions: Include if the loan is tied to specific performance conditions or milestones
1. Loan Terms Schedule: Detailed terms and conditions of the loan including repayment schedule
2. Solvency and Liquidity Test Results: Detailed calculations and supporting documentation for the solvency and liquidity test
3. Special Resolution Copy: Copy of the shareholder special resolution authorizing financial assistance to directors
4. Director's Disclosure: Formal disclosure document from the recipient director regarding personal financial interest
5. Security Documents: If applicable, details of any security or guarantees provided for the loan
Authors
Relevant legal definitions
Clauses
Relevant Industries
Financial Services
Mining and Resources
Manufacturing
Technology
Retail
Professional Services
Real Estate
Healthcare
Agriculture
Transportation and Logistics
Construction
Energy
Telecommunications
Relevant Teams
Legal
Corporate Governance
Finance
Board Secretariat
Compliance
Risk Management
Corporate Affairs
Treasury
Relevant Roles
Chief Executive Officer
Company Secretary
Chief Financial Officer
Board Chairman
Non-Executive Director
Executive Director
Corporate Governance Officer
Legal Counsel
Compliance Officer
Financial Director
Risk Officer
Corporate Secretary
Board Member
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