Board Resolution Format for Loan From Director

BOARD RESOLUTION: AUTHORIZATION OF DIRECTOR LOAN

Document ID: BR-FIN-202X-001
Effective Date: [Date of Meeting]
Version: 1.0
Governing Jurisdiction: [State/Province/Country]

LEGAL DISCLAIMER

This document is a template provided for informational and drafting purposes only. It does not constitute legal or tax advice. Corporate loans from directors to the company involve complex considerations regarding "arm’s length" interest rates, tax implications under IRC/local tax codes, and potential fiduciary conflicts of interest. Legal counsel must review this resolution against the company’s Articles of Incorporation, Bylaws, and relevant jurisdictional statutes (e.g., Delaware General Corporation Law) before execution.

BOARD OF DIRECTORS RESOLUTION

OF [COMPANY FULL LEGAL NAME]

WHEREAS, [Company Full Legal Name] (the "Company") requires additional working capital to fund operations, expansion, or general corporate purposes;

WHEREAS, [Director Name] (the "Lender"), a member of the Board of Directors of the Company, has offered to provide a loan to the Company in the principal amount of $[Amount in USD] (the "Loan");

WHEREAS, the Board of Directors has determined that the terms of the Loan are fair, reasonable, and in the best interests of the Company;

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby approves the execution, delivery, and performance of the Loan Agreement between the Company and the Lender on the terms substantially as presented to the Board.

OPERATIVE TERMS & AUTHORIZATION

1. AUTHORIZATION OF LOAN: The Company is hereby authorized to borrow from the Lender the principal amount of $[Amount in USD].

2. INTEREST AND REPAYMENT: The Loan shall accrue interest at a rate of [Interest Rate]% per annum. Repayment of the principal and accrued interest shall occur on [Maturity Date] (the "Maturity Date"), or such earlier date as may be determined by the Board, provided that the Company may prepay the loan in whole or in part without penalty.

3. EXECUTION OF INSTRUMENTS: The [Authorized Officer Title, e.g., CEO/CFO] of the Company is authorized, empowered, and directed, in the name and on behalf of the Company, to execute, deliver, and perform the Loan Agreement, any Promissory Note, and any other agreements or documents necessary or appropriate to carry out the intent of this resolution.

4. CONFLICT OF INTEREST: The Board acknowledges that [Director Name] is an interested party. The Lender has disclosed their interest in the transaction, and the Board has determined that the transaction is fair to the Company as of the date of authorization. The Lender has abstained from voting on this resolution.

5. RATIFICATION: All actions heretofore taken by any officer of the Company in connection with the matters contemplated by these resolutions are hereby ratified, confirmed, and approved in all respects.

EXECUTION & SIGNATURES

FOR [COMPANY FULL LEGAL NAME]:

By: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role]
Company: [Company Legal Name]
Date: [Date]

FOR [LENDER / DIRECTOR NAME]:

By: _____________________________________
Printed Name: [Director Name]
Title: Director
Date: [Date]

STEP-BY-STEP EXECUTION & FILING GUIDE

1. Verification of Authority: Before execution, verify that the Company’s Bylaws allow for director-led financing and that the quorum requirements for a board meeting were met. Ensure the interested Director is formally recused from the voting process and that said recusal is noted in the corporate minutes.
2. Drafting: Use "Find and Replace" (Ctrl+H) in your word processor to populate all bracketed fields. Ensure the "Interest Rate" is set at or above the Applicable Federal Rate (AFR) to avoid adverse tax characterization by tax authorities.
3. Execution:
   • If using wet ink: Print two originals. Ensure all parties sign in blue ink.
   • If using digital signatures: Upload the document to a platform like DocuSign or Adobe Sign. Use the "Add Signer" function to assign specific signature fields. Ensure the platform produces a "Certificate of Completion" or "Audit Trail."
4. Corporate Records: Attach this signed Resolution to the "Minutes of the Meeting of the Board of Directors." A copy must be stored in the Company’s Minute Book (physical or digital) indefinitely as it serves as primary evidence of corporate debt authorization.
5. Notice: If required by the state of incorporation or by the company’s operating agreement, provide a copy of this executed resolution to all shareholders or other board members for their records.