Companies Act, 1990
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Substantial property transactions involving directors, etc. |
29.—(1) Subject to subsections (6), (7) and (8), a company shall not enter into an arrangement— | |
(a) whereby a director of the company or its holding company or a person connected with such a director acquires or is to acquire one or more non-cash assets of the requisite value from the company; or | ||
(b) whereby the company acquires or is to acquire one or more non-cash assets of the requisite value from such a director or a person so connected; | ||
unless the arrangement is first approved by a resolution of the company in general meeting and, if the director or connected person is a director of its holding company or a person connected with such a director, by a resolution in general meeting of the holding company. | ||
(2) For the purposes of this section a non-cash asset is of the requisite value if at the time the arrangement in question is entered into its value is not less than £1,000 but, subject to that, exceeds £50,000 or ten per cent of the amount of the company's relevant assets, and for those purposes the amount of a company's relevant assets is— | ||
(a) except in a case falling within paragraph (b), the value of its net assets determined by reference to the accounts prepared and laid in accordance with the requirements of section 148 of the Principal Act in respect of the last preceding financial year in respect of which such accounts were so laid; | ||
(b) where no accounts have been prepared and laid under that section before that time, the amount of its called-up share capital. | ||
(3) An arrangement entered into by a company in contravention of this section and any transaction entered into in pursuance of the arrangement (whether by the company or any other person) shall be voidable at the instance of the company unless— | ||
(a) restitution of any money or any other asset which is the subject-matter of the arrangement or transaction is no longer possible or the company has been indemnified in pursuance of subsection (4) (b) by any other person for the loss or damage suffered by it; or | ||
(b) any rights acquired bona fide for value and without actual notice of the contravention by any person who is not a party to the arrangement or transaction would be affected by its avoidance; or | ||
(c) the arrangement is, within a reasonable period, affirmed by the company in general meeting and, if it is an arrangement for the transfer of an asset to or by a director of its holding company or a person who is connected with such a director, is so affirmed with the approval of the holding company given by a resolution in general meeting. | ||
(4) Without prejudice to any liability imposed otherwise than by this subsection, but subject to subsection (5), where an arrangement is entered into with a company by a director of the company or its holding company or a person connected with him in contravention of this section, that director and the person so connected, and any other director of the company who authorised the arrangement or any transaction entered into in pursuance of such an arrangement, shall (whether or not it has been avoided in pursuance of subsection (3)) be liable— | ||
(a) to account to the company for any gain which he had made directly or indirectly by the arrangement or transaction; and | ||
(b) (jointly and severally with any other person liable under this subsection) to indemnify the company for any loss or damage resulting from the arrangement or transaction. | ||
(5) Where an arrangement is entered into by a company and a person connected with a director of the company or its holding company in contravention of this section, that director shall not be liable under subsection (4) if he shows that he took all reasonable steps to secure the company's compliance with this section and, in any case, a person so connected and any such other director as is mentioned in that subsection shall not be so liable if he shows that, at the time the arrangement was entered into, he did not know the relevant circumstances constituting the contravention. | ||
(6) No approval is required to be given under this section by any body corporate unless it is a company within the meaning of the Principal Act or registered under Part IX of that Act or, if it is, for the purposes of section 150 of that Act, a wholly owned subsidiary of any body corporate, wherever incorporated. | ||
(7) Subsection (1) shall not apply in relation to any arrangement for the acquisition of a non-cash asset— | ||
(a) if the non-cash asset in question is or is to be acquired by a holding company from any of its wholly owned subsidiaries or from a holding company by any of its wholly owned subsidiaries or by one wholly owned subsidiary of a holding company from another wholly owned subsidiary of that same holding company; or | ||
(b) if the arrangement is entered into by a company which is being wound up unless the winding up is a members' voluntary winding up. | ||
(8) Subsection (1) (a) shall not apply in relation to any arrangement whereby a person acquires or is to acquire an asset from a company of which he is a member if the arrangement is made with that person in his character as such member. | ||
(9) In this section— | ||
(a) “non-cash asset” means any property or interest in property other than cash, and for this purpose “cash” includes foreign currency; | ||
(b) any reference to the acquisition of a non-cash asset includes a reference to the creation or extinction of an estate or interest in, or a right over, any property and also a reference to the discharge of any person's liability other than a liability for a liquidated sum; and | ||
(c) “net assets”, in relation to a company, means the aggregate of the company's assets less the aggregate of its liabilities, and for this purpose “liabilities” includes any provision for liabilities or charges within paragraph 70 of the Schedule to the Companies (Amendment) Act, 1986 . |