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Q：
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Can a company provide loan to its directors?
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A：
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Typically, a company is not allowed to lend money to a director of the company or any related company. Additionally, the company shall not provide any guarantees or security in connection for a loan taken out by such a director from another party.
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Q：
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Under what exceptional circumstances can a company provide loan to its directors?
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A：
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The company is an exempt private company;
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The loan is meant to cover expenses related to company business;
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The loan is provided to a full time director for the purpose of purchasing a home; or
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A resolution has been passed to approve a scheme for providing loans to full time directors.
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Q：
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Under what conditions can a company be classified as an exempt private company?
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A：
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It does not have any corporate shareholder; and
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Has no more than 20 members.
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Q：
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Under what exceptional circumstances can a company provide loan to persons connected with directors?
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A：
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When the loan is provided, or a guarantee or security is given, in connection with a loan to a subsidiary, a holding company, or a subsidiary of the holding company;
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When the company whose main business includes the lending of money or issuing of guarantees for loans made by others; or
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When the loan is given to an individual connected with a full time director of the company or its related corporation, for the purpose
(1)
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covering costs related to purchasing or acquiring a home; or
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(2)
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in accordance with an employee loan scheme approved by the company.
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Q：
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How can we determine if a person is connected to a director?
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A：
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A family member of the director;
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A corporate entity associated with the director;
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A trustee of any trust, where the director or a family member of the director is a beneficiary; or
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A partner of the director or a partner of an individual connected to the director.
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FAQ
