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| Remedy for unauthorised donation or expenditure by non-GB subsidiary. |
347F. - (1) This section applies where-
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(a) a company ("the parent company") has a subsidiary undertaking falling within subsection (1) of section 347D; |
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(b) the subsidiary undertaking has made any donation or incurred any expenditure to which subsection (1) of section 347B applies; and |
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(c) the parent company has, in relation to that donation or expenditure, failed to discharge its duty under subsection (2) of section 347D to take all such steps as are mentioned in that subsection. |
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(2) Subsections (2) to (4) of section 347E shall, in connection with the donation or expenditure made or incurred by the subsidiary undertaking, apply in relation to the holding company as if-
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(a) it were a company falling within subsection (1) of that section, and |
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(b) the donation or expenditure had been made or incurred by it in contravention of section 347B or 347C. |
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(3) Where only part of the donation or expenditure was not authorised as mentioned in 347D(2), those subsections shall so apply only to that part of it.
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(4) Section 347E(8) applies to any liability of any person arising under section 347E by virtue of this section.
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| Exemption of directors from liability in respect of unauthorised donation or expenditure. |
347G. - (1) Where proceedings are brought against a director or former director of a company in respect of any liability arising under section 347E(2)(a) in connection with a donation or expenditure made or incurred by the company, it shall be a defence for that person to show that-
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(a) the unauthorised amount has been repaid to the company, together with any interest on that amount due under section 347E(3); |
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(b) that repayment has been approved by the company in general meeting; and |
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(c) in the notice of the relevant resolution submitted to that meeting full disclosure was made- |
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(i) of the circumstances in which the donation or expenditure was made or incurred in contravention of section 347B or 347C, and
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(ii) of the circumstances in which, and the person or persons by whom, the repayment was made.
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(2) Where proceedings are brought against a director or former director of a holding company in respect of any liability arising under section 347E(2)(a) in connection with a donation or expenditure made or incurred by a subsidiary of the company, it shall be a defence for that person to show that-
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(a) the unauthorised amount has been repaid either to the subsidiary or to the holding company, together with any interest on that amount due under section 347E(3); |
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(b) that repayment has been approved- |
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(i) (if made to the subsidiary) by both the subsidiary and the holding company in general meeting, or
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(ii) (if made to the holding company) by the holding company in general meeting; and
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(c) in the notice of the relevant resolution submitted to each of those meetings or (as the case may be) to that meeting, full disclosure was made- |
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(i) of the circumstances in which the donation or expenditure was made in contravention of section 347C, and
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(ii) of the circumstances in which, and the person or persons by whom, the repayment was made.
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(3) If the subsidiary is a wholly-owned subsidiary of the holding company, it is not necessary for the purposes of subsection (2) to show (where the repayment was made to the subsidiary) that the repayment has been approved by the subsidiary, and paragraphs (b) and (c) of that subsection shall apply accordingly.
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(4) Where proceedings are brought against a director or former director of a holding company in respect of any liability arising under section 347E(2)(a) in connection with a donation or expenditure made or incurred by a subsidiary of the company which is not a wholly-owned subsidiary, then (subject to subsection (5)) it shall be a defence for that person to show that-
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(a) proceedings have been instituted by the subsidiary against all or any of its directors in respect of the unauthorised amount; and |
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(b) those proceedings are being pursued with due diligence by the subsidiary. |
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(5) A person may not avail himself of the defence provided by subsection (4) except with the leave of the court; and on an application for leave under this subsection the court may make such order as it thinks fit, including an order adjourning, or sanctioning the continuation of, the proceedings against the applicant on such terms and conditions as it thinks fit.
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(6) Where proceedings are brought against a director or former director of a company in respect of any liability arising under section 347E(2)(a) (as applied by virtue of section 347F) in connection with a donation or expenditure made or incurred by a subsidiary undertaking of the company, it shall be a defence for that person to show that-
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(a) the unauthorised amount has been repaid to the subsidiary undertaking, together with any interest on that amount due under section 347E(3) (as so applied); |
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(b) that repayment has been approved by the company in general meeting; and |
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(c) in the notice of the relevant resolution submitted to that meeting full disclosure was made- |
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(i) of the circumstances in which the donation or expenditure was made otherwise than as mentioned in section 347F(1), and
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(ii) of the circumstances in which, and the person or persons by whom, the repayment was made.
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(7) In this section "the unauthorised amount", in relation to any donation or expenditure, means the amount of the donation or expenditure-
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(a) which was made or incurred in contravention of section 347B or 347C, or |
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(b) which was not authorised as mentioned in section 347D(2), |
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as the case may be.
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| Enforcement of directors' liabilities by shareholder action. |
347H. - (1) Any liability of any person under section 347E or 347F as a director or former director of a company is (in addition to being enforceable by proceedings brought by the company) enforceable by proceedings brought under this section in the name of the company by an authorised group of members of the company.
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(2) For the purposes of this section "authorised group", in relation to the members of a company, means any such combination of members as is specified in section 54(2)(a), (b) or (c).
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(3) An authorised group of members of a company may not bring proceedings under this section unless-
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(a) the group has given written notice to the company stating- |
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(i) the cause of action and a summary of the facts on which the proceedings are to be based,
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(ii) the names and addresses of the members of the company comprising the group, and
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(iii) the grounds on which it is alleged that those members constitute an authorised group; and
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(b) not less than 28 days have elapsed between the date of the giving of the notice to the company and the institution of the proceedings. |
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(4) Where such a notice is given to a company, any director may apply to the court within the period of 28 days beginning with the date of the giving of the notice for an order directing that the proposed proceedings are not to be instituted.
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(5) An application under subsection (4) may be made on one or more of the following grounds-
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(a) that the unauthorised amount within the meaning of section 347G has been repaid to the company or subsidiary undertaking as mentioned in subsection (1), (2), (4) or (6) of that section (as the case may be) and the other conditions mentioned in that subsection were satisfied with respect to that repayment; |
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(b) that proceedings to enforce the liability have been instituted by the company and are being pursued with due diligence by the company; |
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(c) that the members proposing to institute proceedings under this section do not constitute an authorised group. |
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(6) Where such an application is made on the ground mentioned in subsection (5)(b), the court may make such order as it thinks fit; and such an order may, as an alternative to directing that the proposed proceedings under this section are not to be instituted, direct-
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(a) that those proceedings may be instituted on such terms and conditions as the court thinks fit; |
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(b) that the proceedings instituted by the company are to be discontinued; |
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(c) that the proceedings instituted by the company may be continued on such terms and conditions as the court thinks fit. |
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(7) If proceedings are brought under this section by an authorised group of members of a company, the group shall owe the same duties to the company in relation to the bringing of those proceedings on behalf of the company as would be owed by the directors of the company if the proceedings were being brought by the company itself; but no proceedings to enforce any duty owed by virtue of this subsection shall be brought by the company except with the leave of the court.
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(8) Proceedings brought under this section may not be discontinued or settled by the group except with the leave of the court; and the court may grant leave under this subsection on such terms as it thinks fit.
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| Costs of shareholder action. |
347I. - (1) This section applies in relation to proceedings brought under section 347H by an authorised group of members of a company ("the group").
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(2) The group may apply to the court for an order directing the company to indemnify the group in respect of costs incurred or to be incurred by the group in connection with the proceedings; and on such an application the court may make such an order on such terms as it thinks fit.
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(3) The group shall not be entitled to be paid any such costs out of the assets of the company except by virtue of such an order.
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(4) If-
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(a) the company is awarded costs in connection with the proceedings or it is agreed that costs incurred by the company in connection with the proceedings should be paid by any defendant, and |
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(b) no order has been made with respect to the proceedings under subsection (2), |
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the costs shall be paid to the group.
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(5) If-
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(a) any defendant is awarded costs in connection with the proceedings or it is agreed that any defendant should be paid costs incurred by him in connection with the proceedings, and |
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(b) no order has been made with respect to the proceedings under subsection (2), |
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the costs shall be paid by the group.
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(6) In the application of this section to Scotland references to costs are to expenses and references to any defendant are to any defender.
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| Information for purposes of shareholder action. |
347J. - (1) Where any proceedings have been instituted under section 347H by an authorised group within the meaning of that section, the group is entitled to require the company to provide the group with all information relating to the subject matter of the proceedings which is in the company's possession or under its control or which is reasonably obtainable by it.
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(2) If the company, having been required by the group to provide the information referred to in subsection (1), refuses to provide the group with all or any of the information, the court may, on an application made by the group, make an order directing-
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(b) any of its officers or employees specified in the application, |
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to provide the group with the information in question in such form and by such means as the court may direct.
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