The following parties are normally required to provide their personal guarantee for bank facility granted to a Sdn Bhd :
1. Directors
ALL directors are normally required to provide personal guarantee for facility granted to a company. However bank may consider to exclude certain directors from providing their personal guarantee if they are not involve in the daily operation of the company AND their combined shareholding is not substantial, for eg. not more than 15%. Under this circumstances, there must be at least 2 guarantors in place. If a company has 2 shareholders cum directors, both directors are required to provide personal guarantee regardless of their shareholding.
2. Shareholders
For a shareholder not holding a directorship position, he will also be required to provide personal guarantee if he holds substantial amount of shares in the company. He may be excluded if he only hold, say, 5% shares.
3. Key-persons
There are instances where the key persons do not surface as a shareholder nor a director, but they are actually running the daily operation of the company. Bank will normally request them to provide their personal guarantee for their active participation in the business.
4. Spouse
It is very common for a bank to request for personal guarantee from the husband if the sole-proprietor is a woman. Borrower should try to convince banks that the husband has nothing to do with the business and exclude him to be a guarantor.
5. Third party
Sometimes an applicant knowing the weak financial position of his company may voluntarily offer a 3rd party with reputable background and sound financial standing as a guarantor.
