Companies A and B are under common control (with common directors) but not part of a group.
Company B is to borrow money and the lender wants a guarantee by Company A.
Is there any Companies Act prohibition on this? Also would this fall under a transactions with director gambit? Any other tax/disclosure/legal pitfalls? Thanks
Replies (2)
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It's clearly a transaction in which a director has an interest.
Companies guarantee other companies' bank borrowings all the time - although usually within group situations - so I can't see how there can be a Companies Act prohibition.
Yes, it would be perfectly allowable, but would need to be disclosed as a related party transaction in both company's accounts.