Companies Act 2014 section 237

Loans, etc., by directors or connected persons to company or holding company: evidential provisions

Section 237 sets out the rules of evidence and legal presumptions that apply in civil proceedings where it is claimed that a director, or a person connected with a director, has made a loan or quasi-loan to the company or its holding company.

• Where the terms of a transaction are not in writing, or are ambiguous, it is presumed that no loan or quasi-loan was made until the contrary is proved.
• Where a loan or quasi-loan is proved to exist but its terms are unclear on interest, it is presumed to be interest-free until the contrary is proved.
• Where the terms are unclear on security, the loan is presumed to be unsecured; and if proved to be secured but unclear on priority, it is presumed to rank below all other company debts.
• Where written terms are incomplete and the nature of the transaction or key details are alleged to rest on unwritten terms, this counts as ambiguity and triggers the same presumptions.