The simple answer to this question is yes, more than one company director can give a personal guarantee. This could be to a lender providing a loan to the company or a commercial landlord offering a lease.
Indeed, the other party to the agreement may insist that more than one director sign a guarantee. These guarantees may be deemed joint, several, or joint and several. If you are asked to sign a directors personal guarantee, you should seek independent legal advice. You will find plenty of companies that can provide this, such as Parachute Law, by searching online.
Why would a lender ask for more than one guarantee?
The company may have a poor credit history or have insufficient assets to cover the liability into which it has entered. Under these circumstances, a personal director guarantee will be required to provide security; in fact, the lender or landlord may feel they need more than one director to provide this security. If one director is unable to pay the outstanding liability, one of the others will have to pay the full amount under the rule of joint and several liability.
How does joint and several liability work?
In contract law joint and several liability occurs when two or more persons jointly promise in the same contract to do the same thing and separately, or severally, promise to do the same thing.
By providing this kind of personal guarantee, the individual director adds their personal credit history to the application for a loan or a tenancy agreement, which means the lender or landlord will feel more comfortable. Before signing a guarantee, all directors should consider their position. The other party will have checked the assets they are putting forward and how easy these are to liquidate, which may influence which director they approach first.
As an example, let’s say the first director puts forward shares and stocks as security and the second director puts forward their family home. The shares and stocks would be more easily liquidated than the family home, so the first director would be approached first.