Director’s guarantee

This guidance note explains the use of director’s guarantees in financing transactions, and answers the question “when and why do lenders require director’s guarantees?”

A corporate borrower often has multiple directors, and it is common for the lender to require a director’s guarantee from each of the directors. This guidance note summarises in table form the basis of the director’s liability to the lender, being joint, several, or joint and several.

Other matters that this guidance note covers include:

• • key considerations for the lender and the director when entering into a director’s guarantee; and
• • tips for legal practitioners when advising directors regarding director’s guarantees.

See Director’s guarantee.