Corporate benefit

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-06

// THE SHORT ANSWER

Corporate benefit is the requirement that a company giving a guarantee or security for someone else's debt does so because its directors judge it to be in that company's own interests. In the UK, Australia and New Zealand directors owe their duties to each company separately, not to the group, although in Australia and New Zealand a wholly owned subsidiary's constitution may let them act in the parent's interests, in Australia only while the subsidiary stays solvent. A guarantee given without benefit can be challenged later, so lenders ask for board minutes recording the benefit, and often a shareholder resolution.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.