Contributed By Hawkins Hatton Corporate Lawyers Ltd
Before an entity can give valid security over its real estate assets, a private company director will need to have regard to his/her director’s duties and whether any transaction is for the company’s benefit and that the company is solvent pursuant to the Companies Act 2006. If corporate benefit to giving security cannot be established, a director could be in breach of his/her duties to the company. Directors are encouraged to record the basis of their decisions in board minutes and to identify the corporate benefit. It is also advisable to ask the company’s auditor to confirm the company’s solvency.