Loans and guarantees are high-risk because they can look commercially simple but legally sensitive. Section 185 targets loans to directors and connected persons; Section 186 covers inter-corporate loans, investments, guarantees and securities.
| Section | Core focus | Finance control |
|---|---|---|
| Section 185 | Loan to directors and related covered persons. | Screen borrower/beneficiary relationship before loan or guarantee. |
| Section 186 | Loans, investments, guarantees and securities by company. | Check limits, approvals, registers and disclosure. |
| Section 179 link | Board powers and approvals. | Route through correct board approval matrix. |
| Accounts/audit link | Disclosure and evidence. | Maintain agreement, board note and ledger support. |
Board notes, resolutions, loan agreements, valuation/investment papers, ledger extracts, repayment schedule and statutory register extracts should be maintained in the finance-secretarial file.
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Section 185 focuses on loans to directors/connected persons, while Section 186 covers loans, investments, guarantees and securities by a company.
Yes. Guarantees and securities can be covered in these provisions and should be reviewed before issuance.
Yes. These transactions need both commercial and legal-compliance review.