Template Description

This board resolution template provides a structured framework for companies to formalize the acceptance of loans from their directors. It is a 2-page MS Word document. This resolution is essential for companies seeking to raise funds through loans from their directors while ensuring compliance with the provisions of the Companies Act, 2013, and the Companies (Acceptance of Deposits) Rules, 2014.

Understanding a Board Resolution for Authorization to Borrow Money from the Directors of the Company

Terminologies:

1. Board Resolution refers to the formal decision taken by the board of directors during a board meeting, documented under the Companies Act, 2013.
2. Loan by Director refers to an unsecured loan provided by a director of the company, subject to the conditions outlined in the Companies Act, 2013.

Procedure for Approving a Loan by Director:

1.   Convene Board Meeting:

• Schedule a Board meeting as per the requirements of the Companies Act, 2013.
• Hold the meeting at the registered office of the company.

2.   Approval for Loan from Director:

• Pass a resolution approving the company to borrow money from its directors.
• The loan should be unsecured and in accordance with Section 179(3)(d) of the Companies Act, 2013, and the Companies (Acceptance of Deposits) Rules, 2014.

3.   Declaration of Source of Funds: The director providing the loan must submit a declaration stating that the loan amount is not borrowed or obtained from external deposits.

4.   Authorization to Execute Documents: Authorize any director to execute all necessary documents, forms, and deeds for the loan agreement and make any required modifications.

5.   Borrowing Limit: The resolution must state the maximum loan amount the company is authorized to borrow from each director and in aggregate.

6.   Legal Compliance: Ensure compliance with relevant provisions of the Companies Act, 2013, and adhere to the regulatory framework for unsecured loans from directors.

7.   Certification and Record Keeping: A certified copy of the resolution must be submitted and kept for record purposes. The resolution is valid until the full loan amount is repaid, or new terms are approved.

Conclusion

This template is a vital tool for companies seeking to raise funds through directors' loans. It ensures that the loan process is transparent, compliant with the law, and well-documented, protecting both the company and its directors. Proper use of this template will simplify the legal formalities and ensure that all necessary authorizations are in place.