Question

a) A private company as well as a public company applies for credit. Are the guarantees/suretyship...

a) A private company as well as a public company applies for credit. Are the guarantees/suretyship of all shareholders essential in both cases? Provide reasons for your answers.

b) The trustee of a discretionary trust approaches the bank for a loan. The assets of the trust can serve as sufficient collateral for the required loan. Are there any specific aspects that you as banker should consider?

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Answer #1

a) For a private company, if the shares are pledged in exchange of loan, then the guarantee of all the shareholders are required. For a public company, if a guarantee is sought, then the guarantee is only taken from the majority shareholder since for a public company, there could be many shareholders.

b) The banker should check that if these assets are not under lien with regards to any other obligation. Also the banker should check whether the trustee is empowered to offer assets of the trust as collateral under the trusteeship deed

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