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Quasi-loan

The Companies Act 1980 introduced the legal term ‘quasi-loan’ in sections concerning the restrictions on companies making loans to directors. A quasi-loan arises when the company incurs a liability or agrees to incur such a liability in circumstances when the director is under an obligation to reimburse the company for the amount involved. An example would be where the company holds a credit card and that card is used in a transaction for the sole benefit of a director personally. The company has assumed a liability through use of the card and the director, as beneficiary of the transaction, must reimburse the company.

Reference: The Penguin Business Dictionary , 3rd edt.