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196 | The person for whom a transaction or arrangement is entered into |
| |
For the purposes of sections 183 to 198 (loans etc) the person for whom a |
| |
transaction or arrangement is entered into is— |
| |
(a) | in the case of a loan or quasi-loan, the person to whom it is made; |
| |
(b) | in the case of a credit transaction, the person to whom goods, land or |
| 5 |
services are supplied, sold, hired, leased or otherwise disposed of |
| |
| |
(c) | in the case of a guarantee or security, the person for whom the |
| |
transaction is made in connection with which the guarantee or security |
| |
| 10 |
(d) | in the case of an arrangement within section 187 (related |
| |
arrangements), the person for whom the transaction is made to which |
| |
| |
197 | Loans etc: civil consequences of contravention |
| |
(1) | This section applies where a company enters into a transaction or arrangement |
| 15 |
in contravention of section 183, 185 or 187 (requirement of members’ approval |
| |
| |
(2) | The transaction or arrangement is voidable at the instance of the company, |
| |
| |
(a) | restitution of any money or other asset that was the subject-matter of |
| 20 |
the transaction or arrangement is no longer possible, |
| |
(b) | the company has been indemnified for any loss or damage resulting |
| |
from the transaction or arrangement, or |
| |
(c) | rights acquired in good faith, for value and without actual notice of the |
| |
contravention by a person who is not a party to the transaction or |
| 25 |
arrangement would be affected by the avoidance. |
| |
(3) | Whether or not the transaction or arrangement has been avoided, each of the |
| |
persons specified in subsection (4) is liable— |
| |
(a) | to account to the company for any gain that he has made directly or |
| |
indirectly by the transaction or arrangement, and |
| 30 |
(b) | (jointly and severally with any other person so liable under this section) |
| |
to indemnify the company for any loss or damage resulting from the |
| |
transaction or arrangement. |
| |
(4) | The persons so liable are— |
| |
(a) | any director of the company or of its holding company with whom the |
| 35 |
company entered into the transaction or arrangement in contravention |
| |
| |
(b) | any person with whom the company entered into the transaction or |
| |
arrangement in contravention of any of those sections who is connected |
| |
with a director of the company or of its holding company, |
| 40 |
(c) | the director of the company or of its holding company with whom any |
| |
such person is connected, and |
| |
(d) | any other director of the company who authorised the transaction or |
| |
| |
(5) | Subsections (3) and (4) are subject to the following two subsections. |
| 45 |
(6) | In the case of a transaction or arrangement entered into by a company in |
| |
contravention of section 183, 185 or 187 with a person connected with a director |
| |
|
| |
|
| |
|
of the company or of its holding company, that director is not liable by virtue |
| |
of subsection (4)(c) if he shows that he took all reasonable steps to secure the |
| |
company’s compliance with the section concerned. |
| |
| |
(a) | a person so connected is not liable by virtue of subsection (4)(b), and |
| 5 |
(b) | a director is not liable by virtue of subsection (4)(d), |
| |
| if he shows that, at the time the transaction or arrangement was entered into, |
| |
he did not know the relevant circumstances constituting the contravention. |
| |
(8) | Nothing in this section shall be read as excluding the operation of any other |
| |
enactment or rule of law by virtue of which the transaction or arrangement |
| 10 |
may be called in question or any liability to the company may arise. |
| |
198 | Loans etc: effect of subsequent affirmation |
| |
| Where a transaction or arrangement is entered into by a company in |
| |
contravention of section 183, 185 or 187 (requirement of members’ approval for |
| |
loans etc) but, within a reasonable period, it is affirmed— |
| 15 |
(a) | in the case of a contravention of subsection (1) of that section, by |
| |
resolution of the members of the company, and |
| |
(b) | in the case of a contravention of subsection (2) of that section, by |
| |
resolution of the members of the holding company, |
| |
| the transaction or arrangement may no longer be avoided under section 197. |
| 20 |
Payments for loss of office |
| |
199 | Payments for loss of office |
| |
(1) | In this Chapter a “payment for loss of office” means a payment made to a |
| |
director or past director of a company— |
| |
(a) | by way of compensation for loss of office as director of the company, |
| 25 |
(b) | by way of compensation for loss, while director of the company or in |
| |
connection with his ceasing to be a director of it, of— |
| |
(i) | any other office or employment in connection with the |
| |
management of the affairs of the company, or |
| |
(ii) | any office (as director or otherwise) or employment in |
| 30 |
connection with the management of the affairs of any |
| |
subsidiary undertaking of the company, |
| |
(c) | as consideration for or in connection with his retirement from his office |
| |
as director of the company, or |
| |
(d) | as consideration for or in connection with his retirement, while director |
| 35 |
of the company or in connection with his ceasing to be a director of it, |
| |
| |
(i) | any other office or employment in connection with the |
| |
management of the affairs of the company, or |
| |
(ii) | any office (as director or otherwise) or employment in |
| 40 |
connection with the management of the affairs of any |
| |
subsidiary undertaking of the company. |
| |
(2) | The references to compensation and consideration include benefits otherwise |
| |
than in cash and references in this Chapter to payment have a corresponding |
| |
| 45 |
|
| |
|
| |
|
(3) | For the purposes of sections 201 to 205 (payments requiring members’ |
| |
| |
(a) | payment to a person connected with a director, or |
| |
(b) | payment to any person at the direction of, or for the benefit of, a |
| |
director or a person connected with him, |
| 5 |
| is treated as payment to the director. |
| |
(4) | References in those sections to payment by a person include payment by |
| |
another person at the direction of, or on behalf of, the person referred to. |
| |
200 | Amounts taken to be payments for loss of office |
| |
(1) | This section applies where in connection with any such transfer as is |
| 10 |
mentioned in section 202 or 203 (payment in connection with transfer of |
| |
undertaking, property or shares) a director of the company— |
| |
(a) | is to cease to hold office, or |
| |
(b) | is to cease to be the holder of— |
| |
(i) | any other office or employment in connection with the |
| 15 |
management of the affairs of the company, or |
| |
(ii) | any office (as director or otherwise) or employment in |
| |
connection with the management of the affairs of any |
| |
subsidiary undertaking of the company. |
| |
(2) | If in connection with any such transfer— |
| 20 |
(a) | the price to be paid to the director for any shares in the company held |
| |
by him is in excess of the price which could at the time have been |
| |
obtained by other holders of like shares, or |
| |
(b) | any valuable consideration is given to the director by a person other |
| |
| 25 |
| the excess or, as the case may be, the money value of the consideration is taken |
| |
for the purposes of those sections to have been a payment for loss of office. |
| |
201 | Payment by company: requirement of members’ approval |
| |
(1) | A company may not make a payment for loss of office to a director of the |
| |
company unless the payment has been approved by a resolution of the |
| 30 |
| |
(2) | A company may not make a payment for loss of office to a director of its |
| |
holding company unless the payment has been approved by a resolution of the |
| |
members of each of those companies. |
| |
(3) | A resolution approving a payment to which this section applies must not be |
| 35 |
passed unless a memorandum setting out particulars of the proposed payment |
| |
(including its amount) is made available to the members of the company whose |
| |
| |
(a) | in the case of a written resolution, by being sent or submitted to every |
| |
eligible member at or before the time at which the proposed resolution |
| 40 |
is sent or submitted to him; |
| |
(b) | in the case of a resolution at a meeting, by being made available for |
| |
inspection by the members both— |
| |
(i) | at the company’s registered office for not less than 15 days |
| |
ending with the date of the meeting, and |
| 45 |
(ii) | at the meeting itself. |
| |
|
| |
|
| |
|
(4) | No approval is required under this section on the part of the members of— |
| |
(a) | a body corporate that is not— |
| |
(i) | a company as defined in section 1 of this Act, or |
| |
(ii) | a body registered under the Companies Acts by virtue of |
| |
section 694 (bodies not formed under Companies Acts but |
| 5 |
| |
(b) | a body corporate that is a wholly-owned subsidiary of another body |
| |
| |
202 | Payment in connection with transfer of undertaking etc: requirement of |
| |
| 10 |
(1) | No payment for loss of office may be made by any person to a director of a |
| |
company in connection with the transfer of the whole or any part of the |
| |
undertaking or property of the company unless the payment has been |
| |
approved by a resolution of the members of the company. |
| |
(2) | No payment for loss of office may be made by any person to a director of a |
| 15 |
company in connection with the transfer of the whole or any part of the |
| |
undertaking or property of a subsidiary of the company unless the payment |
| |
has been approved by a resolution of the members of each of the companies. |
| |
(3) | A resolution approving a payment to which this section applies must not be |
| |
passed unless a memorandum setting out particulars of the proposed payment |
| 20 |
(including its amount) is made available to the members of the company whose |
| |
| |
(a) | in the case of a written resolution, by being sent or submitted to every |
| |
eligible member at or before the time at which the proposed resolution |
| |
is sent or submitted to him; |
| 25 |
(b) | in the case of a resolution at a meeting, by being made available for |
| |
inspection by the members both— |
| |
(i) | at the company’s registered office for not less than 15 days |
| |
ending with the date of the meeting, and |
| |
(ii) | at the meeting itself. |
| 30 |
(4) | No approval is required under this section on the part of the members of— |
| |
(a) | a body corporate that is not— |
| |
(i) | a company as defined in section 1 of this Act, or |
| |
(ii) | a body registered under the Companies Acts by virtue of |
| |
section 694 (bodies not formed under Companies Acts but |
| 35 |
| |
(b) | a body corporate that is a wholly-owned subsidiary of another body |
| |
| |
(5) | A payment made in pursuance of an arrangement— |
| |
(a) | entered into as part of the agreement for the transfer in question, or |
| 40 |
within one year before or two years after that agreement, and |
| |
(b) | to which the company whose undertaking or property is transferred, or |
| |
any person to whom the transfer is made, is privy, |
| |
| is presumed, except in so far as the contrary is shown, to be a payment to which |
| |
| 45 |
|
| |
|