When a business is leant money by a bank or individual one of the many items discussed is the security offered for the injection of cash. Unfortunately although advise is normally given when documents are ready for signing and there are no options left the security requested and that available are not always identified early enough for all parties to consider their options.

 

When a Director is asked to invest further funds into the business to secure further support from his bankers it should always be a consideration if the company is able to provide the Director with security for the investment. At the time of the money being introduced there may not be any tangible security available but this may change and if the correct procedure is not completed when the investment is made security will be less effective in the future.

 

We would urge all Directors to make sure they understand both their current responsibilities and security arrangements and to review these at least once per year.



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