20th February 2024

Director’s Certificates: Why do lenders require them?

By Kanika Stephens

A Director’s Certificate is a legal document which can be used to verify the legitimacy of a company and the identify of its directors.

While not typically required for loan transactions, the contents of director’s certificates are nevertheless guided by the laws and regulations which relate to corporate governance, company disclosures, and contractual agreements.

It is important any company director understands the compliance regulations of a director’s certificate and their responsibilities in drafting and signing this document.

What is a director’s certificate and what does it include?

Director’s certificates are usually required by lenders in loan transactions involving companies, such as borrowers and other companies providing security. A certificate is typically provided by a director on behalf of the company.

The specific content and wording of a director’s certificate can vary based on the lender’s preference and the complexity of the loan transaction. In a basic loan facility scenario, a director will typically need to certify that:

  1. The copies of the company’s constitutional documents, such as the certificate(s) of incorporation, articles of association and memorandum of association, are correct, complete and up to date.
  2. The meeting of the directors of the company during which the loan and security documents were approved was properly called and held; the directors of the company are authorised to sign the loan and security documents; and the board resolutions have not been amended or cancelled and are in full force and effect at the date of the loan documents; and
  3. The company will not be in breach of any other agreement or document if it borrows or guarantees or provides security in relation to the loan.

A director’s certificate may often include a sample signature of each director authorised to sign the documents. In addition, if the director’s certificate is signed before the date of the loan agreement, a statement can be included confirming to the lender the certificate will remain accurate until the loan is drawn down, and the director who signs the certificate will notify the lender if anything changes.

Why do lenders require these documents?

Lenders want to mitigate their risk by ensuring the borrowing company and each company which provides security, or a guarantee is:

  1. A legitimate entity
  2. Has authority to enter into transaction documents; and
  3. Entering into those won’t breach its obligations under any other documents.

A director’s certificate may allow the lender to hold the director who signed the certificate accountable for the accuracy of the information provided; if any of the information in the certificate later proves to be false or misleading, the director may risk incurring personal liability.

What do directors need to consider before signing a director’s certificate?

Directors must always act in the best interest of the company, so it’s important they ensure the information in the director’s certificate accurately reflects the company’s status and commitments. It’s crucial to be truthful and thorough both in investigating the company’s affairs and when giving representation of the company’s position in order to avoid serious legal consequences. In any event, directors should always seek professional advice before signing a certificate to mitigate any potential risks.


Director’s certificates, while not legally required, are crucial in loan transactions as they affirm the accuracy of fundamental documents. Lenders use them to mitigate risks, validate the company’s legitimacy, and hold directors accountable for information provided. Directors must accurately represent the company’s status, seek legal advice, and act in its best interest to avoid potential liabilities associated with any misleading information.

If you would like a conversation to find out how we could help you or if you have any questions in relation to Director’s Certificates, please contact our Real Estate Finance team.

Director’s Certificates: Why do lenders require them?

Have a question? Contact Kanika

Have a question? Contact Kanika


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