Office of Public Sector Information
PART 10 continued CHAPTER 4 continued
(4) Neither the person making the offer, nor any associate of his (as defined in section 988), is entitled to vote on the resolution, but—
(a) where the resolution is proposed as a written resolution, they are entitled (if they would otherwise be so entitled) to be sent a copy of it, and
(b) at any meeting to consider the resolution they are entitled (if they would otherwise be so entitled) to be given notice of the meeting, to attend and speak and if present (in person or by proxy) to count towards the quorum.
(5) If at a meeting to consider the resolution a quorum is not present, and after the meeting has been adjourned to a later date a quorum is again not present, the payment is (for the purposes of this section) deemed to have been approved.
(6) No approval is required under this section on the part of shareholders in a body corporate that—
(a) is not a UK-registered company, or
(b) is a wholly-owned subsidiary of another body corporate.
(7) A payment made in pursuance of an arrangement—
(a) entered into as part of the agreement for the transfer in question, or within one year before or two years after that agreement, and
(b) to which the company whose shares are the subject of the bid, 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 this section applies.
(1) Approval is not required under section 217, 218 or 219 (payments requiring members' approval) for a payment made in good faith—
(a) in discharge of an existing legal obligation (as defined below),
(b) by way of damages for breach of such an obligation,
(c) by way of settlement or compromise of any claim arising in connection with the termination of a person’s office or employment, or
(d) by way of pension in respect of past services.
(2) In relation to a payment within section 217 (payment by company) an existing legal obligation means an obligation of the company, or any body corporate associated with it, that was not entered into in connection with, or in consequence of, the event giving rise to the payment for loss of office.
(3) In relation to a payment within section 218 or 219 (payment in connection with transfer of undertaking, property or shares) an existing legal obligation means an obligation of the person making the payment that was not entered into for the purposes of, in connection with or in consequence of, the transfer in question.
(4) In the case of a payment within both section 217 and section 218, or within both section 217 and section 219, subsection (2) above applies and not subsection (3).
(5) A payment part of which falls within subsection (1) above and part of which does not is treated as if the parts were separate payments.
(1) Approval is not required under section 217, 218 or 219 (payments requiring members' approval) if—
(a) the payment in question is made by the company or any of its subsidiaries, and
(b) the amount or value of the payment, together with the amount or value of any other relevant payments, does not exceed £200.
(2) For this purpose “other relevant payments” are payments for loss of office in relation to which the following conditions are met.
(3) Where the payment in question is one to which section 217 (payment by company) applies, the conditions are that the other payment was or is paid—
(a) by the company making the payment in question or any of its subsidiaries,
(b) to the director to whom that payment is made, and
(c) in connection with the same event.
(4) Where the payment in question is one to which section 218 or 219 applies (payment in connection with transfer of undertaking, property or shares), the conditions are that the other payment was (or is) paid in connection with the same transfer—
(a) to the director to whom the payment in question was made, and
(b) by the company making the payment or any of its subsidiaries.
(1) If a payment is made in contravention of section 217 (payment by company)—
(a) it is held by the recipient on trust for the company making the payment, and
(b) any director who authorised the payment is jointly and severally liable to indemnify the company that made the payment for any loss resulting from it.
(2) If a payment is made in contravention of section 218 (payment in connection with transfer of undertaking etc), it is held by the recipient on trust for the company whose undertaking or property is or is proposed to be transferred.
(3) If a payment is made in contravention of section 219 (payment in connection with share transfer)—
(a) it is held by the recipient on trust for persons who have sold their shares as a result of the offer made, and
(b) the expenses incurred by the recipient in distributing that sum amongst those persons shall be borne by him and not retained out of that sum.
(4) If a payment is in contravention of section 217 and section 218, subsection (2) of this section applies rather than subsection (1).
(5) If a payment is in contravention of section 217 and section 219, subsection (3) of this section applies rather than subsection (1), unless the court directs otherwise.
(1) For the purposes of—
(a) sections 188 and 189 (directors' service contracts),
(b) sections 190 to 196 (property transactions),
(c) sections 197 to 214 (loans etc), and
(d) sections 215 to 222 (payments for loss of office),
a shadow director is treated as a director.
(2) Any reference in those provisions to loss of office as a director does not apply in relation to loss of a person’s status as a shadow director.
(1) Where—
(a) approval under this Chapter is sought by written resolution, and
(b) a memorandum is required under this Chapter to be sent or submitted to every eligible member before the resolution is passed,
any accidental failure to send or submit the memorandum to one or more members shall be disregarded for the purpose of determining whether the requirement has been met.
(2) Subsection (1) has effect subject to any provision of the company’s articles.
(1) Approval may be required under more than one provision of this Chapter.
(2) If so, the requirements of each applicable provision must be met.
(3) This does not require a separate resolution for the purposes of each provision.
For section 66 of the Charities Act 1993 (c. 10) substitute—
(1) Where a company is a charity—
(a) any approval given by the members of the company under any provision of Chapter 4 of Part 10 of the Companies Act 2006 (transactions with directors requiring approval by members) listed in subsection (2) below, and
(b) any affirmation given by members of the company under section 196 or 214 of that Act (affirmation of unapproved property transactions and loans),
is ineffective without the prior written consent of the Commission.
(2) The provisions are—
(a) section 188 (directors' long-term service contracts);
(b) section 190 (substantial property transactions with directors etc);
(c) section 197, 198 or 200 (loans and quasi-loans to directors etc);
(d) section 201 (credit transactions for benefit of directors etc);
(e) section 203 (related arrangements);
(f) section 217 (payments to directors for loss of office);
(g) section 218 (payments to directors for loss of office: transfer of undertaking etc).
(1) A company that is a charity may not do an act to which this section applies without the prior written consent of the Commission.
(2) This section applies to an act that—
(a) does not require approval under a listed provision of Chapter 4 of Part 10 of the Companies Act 2006 (transactions with directors) by the members of the company, but
(b) would require such approval but for an exemption in the provision in question that disapplies the need for approval on the part of the members of a body corporate which is a wholly-owned subsidiary of another body corporate.
(3) The reference to a listed provision is a reference to a provision listed in section 66(2) above.
(4) If a company acts in contravention of this section, the exemption referred to in subsection (2)(b) shall be treated as of no effect in relation to the act.”.
(1) For the purposes of this Part a director’s “service contract”, in relation to a company, means a contract under which—
(a) a director of the company undertakes personally to perform services (as director or otherwise) for the company, or for a subsidiary of the company, or
(b) services (as director or otherwise) that a director of the company undertakes personally to perform are made available by a third party to the company, or to a subsidiary of the company.
(2) The provisions of this Part relating to directors' service contracts apply to the terms of a person’s appointment as a director of a company.
They are not restricted to contracts for the performance of services outside the scope of the ordinary duties of a director.
(1) A company must keep available for inspection—
(a) a copy of every director’s service contract with the company or with a subsidiary of the company, or
(b) if the contract is not in writing, a written memorandum setting out the terms of the contract.
(2) All the copies and memoranda must be kept available for inspection at—
(a) the company’s registered office, or
(b) a place specified in regulations under section 1136.
(3) The copies and memoranda must be retained by the company for at least one year from the date of termination or expiry of the contract and must be kept available for inspection during that time.
(4) The company must give notice to the registrar—
(a) of the place at which the copies and memoranda are kept available for inspection, and
(b) of any change in that place,
unless they have at all times been kept at the company’s registered office.
(5) If default is made in complying with subsection (1), (2) or (3), or default is made for 14 days in complying with subsection (4), an offence is committed by every officer of the company who is in default.
(6) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
(7) The provisions of this section apply to a variation of a director’s service contract as they apply to the original contract.
(1) Every copy or memorandum required to be kept under section 228 must be open to inspection by any member of the company without charge.
(2) Any member of the company is entitled, on request and on payment of such fee as may be prescribed, to be provided with a copy of any such copy or memorandum.
The copy must be provided within seven days after the request is received by the company.
(3) If an inspection required under subsection (1) is refused, or default is made in complying with subsection (2), an offence is committed by every officer of the company who is in default.
(4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
(5) In the case of any such refusal or default the court may by order compel an immediate inspection or, as the case may be, direct that the copy required be sent to the person requiring it.
A shadow director is treated as a director for the purposes of the provisions of this Chapter.
(1) This section applies where—
(a) a limited company having only one member enters into a contract with the sole member,
(b) the sole member is also a director of the company, and
(c) the contract is not entered into in the ordinary course of the company’s business.
(2) The company must, unless the contract is in writing, ensure that the terms of the contract are either—
(a) set out in a written memorandum, or
(b) recorded in the minutes of the first meeting of the directors of the company following the making of the contract.
(3) If a company fails to comply with this section an offence is committed by every officer of the company who is in default.
(4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(5) For the purposes of this section a shadow director is treated as a director.
(6) Failure to comply with this section in relation to a contract does not affect the validity of the contract.
(7) Nothing in this section shall be read as excluding the operation of any other enactment or rule of law applying to contracts between a company and a director of the company.
(1) Any provision that purports to exempt a director of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void.
(2) Any provision by which a company directly or indirectly provides an indemnity (to any extent) for a director of the company, or of an associated company, against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company of which he is a director is void, except as permitted by—
(a) section 233 (provision of insurance),
(b) section 234 (qualifying third party indemnity provision), or
(c) section 235 (qualifying pension scheme indemnity provision).
(3) This section applies to any provision, whether contained in a company’s articles or in any contract with the company or otherwise.
(4) Nothing in this section prevents a company’s articles from making such provision as has previously been lawful for dealing with conflicts of interest.
Section 232(2) (voidness of provisions for indemnifying directors) does not prevent a company from purchasing and maintaining for a director of the company, or of an associated company, insurance against any such liability as is mentioned in that subsection.
(1) Section 232(2) (voidness of provisions for indemnifying directors) does not apply to qualifying third party indemnity provision.
(2) Third party indemnity provision means provision for indemnity against liability incurred by the director to a person other than the company or an associated company.
Such provision is qualifying third party indemnity provision if the following requirements are met.
(3) The provision must not provide any indemnity against—
(a) any liability of the director to pay—
(i) a fine imposed in criminal proceedings, or
(ii) a sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature (however arising); or
(b) any liability incurred by the director—
(i) in defending criminal proceedings in which he is convicted, or
(ii) in defending civil proceedings brought by the company, or an associated company, in which judgment is given against him, or
(iii) in connection with an application for relief (see subsection (6)) in which the court refuses to grant him relief.
(4) The references in subsection (3)(b) to a conviction, judgment or refusal of relief are to the final decision in the proceedings.
(5) For this purpose—
(a) a conviction, judgment or refusal of relief becomes final—
(i) if not appealed against, at the end of the period for bringing an appeal, or
(ii) if appealed against, at the time when the appeal (or any further appeal) is disposed of; and
(b) an appeal is disposed of—
(i) if it is determined and the period for bringing any further appeal has ended, or
(ii) if it is abandoned or otherwise ceases to have effect.
(6) The reference in subsection (3)(b)(iii) to an application for relief is to an application for relief under—
section 661(3) or (4) (power of court to grant relief in case of acquisition of shares by innocent nominee), or
section 1157 (general power of court to grant relief in case of honest and reasonable conduct).
(1) Section 232(2) (voidness of provisions for indemnifying directors) does not apply to qualifying pension scheme indemnity provision.
(2) Pension scheme indemnity provision means provision indemnifying a director of a company that is a trustee of an occupational pension scheme against liability incurred in connection with the company’s activities as trustee of the scheme.
Such provision is qualifying pension scheme indemnity provision if the following requirements are met.
(3) The provision must not provide any indemnity against—
(a) any liability of the director to pay—
(i) a fine imposed in criminal proceedings, or
(ii) a sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature (however arising); or
(b) any liability incurred by the director in defending criminal proceedings in which he is convicted.
(4) The reference in subsection (3)(b) to a conviction is to the final decision in the proceedings.
(5) For this purpose—
(a) a conviction becomes final—
(i) if not appealed against, at the end of the period for bringing an appeal, or
(ii) if appealed against, at the time when the appeal (or any further appeal) is disposed of; and
(b) an appeal is disposed of—
(i) if it is determined and the period for bringing any further appeal has ended, or
(ii) if it is abandoned or otherwise ceases to have effect.
(6) In this section “occupational pension scheme” means an occupational pension scheme as defined in section 150(5) of the Finance Act 2004 (c. 12) that is established under a trust.
(1) This section requires disclosure in the directors' report of—
(a) qualifying third party indemnity provision, and
(b) qualifying pension scheme indemnity provision.
Such provision is referred to in this section as “qualifying indemnity provision”.
(2) If when a directors' report is approved any qualifying indemnity provision (whether made by the company or otherwise) is in force for the benefit of one or more directors of the company, the report must state that such provision is in force.
(3) If at any time during the financial year to which a directors' report relates any such provision was in force for the benefit of one or more persons who were then directors of the company, the report must state that such provision was in force.
(4) If when a directors' report is approved qualifying indemnity provision made by the company is in force for the benefit of one or more directors of an associated company, the report must state that such provision is in force.
(5) If at any time during the financial year to which a directors' report relates any such provision was in force for the benefit of one or more persons who were then directors of an associated company, the report must state that such provision was in force.
(1) This section has effect where qualifying indemnity provision is made for a director of a company, and applies—
(a) to the company of which he is a director (whether the provision is made by that company or an associated company), and
(b) where the provision is made by an associated company, to that company.
(2) That company or, as the case may be, each of them must keep available for inspection—
(a) a copy of the qualifying indemnity provision, or
(b) if the provision is not in writing, a written memorandum setting out its terms.
(3) The copy or memorandum must be kept available for inspection at—
(a) the company’s registered office, or
(b) a place specified in regulations under section 1136.
(4) The copy or memorandum must be retained by the company for at least one year from the date of termination or expiry of the provision and must be kept available for inspection during that time.
(5) The company must give notice to the registrar—
(a) of the place at which the copy or memorandum is kept available for inspection, and
(b) of any change in that place,
unless it has at all times been kept at the company’s registered office.
(6) If default is made in complying with subsection (2), (3) or (4), or default is made for 14 days in complying with subsection (5), an offence is committed by every officer of the company who is in default.
(7) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
(8) The provisions of this section apply to a variation of a qualifying indemnity provision as they apply to the original provision.
(9) In this section “qualifying indemnity provision” means—
(a) qualifying third party indemnity provision, and
(b) qualifying pension scheme indemnity provision.
(1) Every copy or memorandum required to be kept by a company under section 237 must be open to inspection by any member of the company without charge.
(2) Any member of the company is entitled, on request and on payment of such fee as may be prescribed, to be provided with a copy of any such copy or memorandum.
The copy must be provided within seven days after the request is received by the company.
(3) If an inspection required under subsection (1) is refused, or default is made in complying with subsection (2), an offence is committed by every officer of the company who is in default.
(4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
(5) In the case of any such refusal or default the court may by order compel an immediate inspection or, as the case may be, direct that the copy required be sent to the person requiring it.
(1) This section applies to the ratification by a company of conduct by a director amounting to negligence, default, breach of duty or breach of trust in relation to the company.
(2) The decision of the company to ratify such conduct must be made by resolution of the members of the company.
(3) Where the resolution is proposed as a written resolution neither the director (if a member of the company) nor any member connected with him is an eligible member.
(4) Where the resolution is proposed at a meeting, it is passed only if the necessary majority is obtained disregarding votes in favour of the resolution by the director (if a member of the company) and any member connected with him.
This does not prevent the director or any such member from attending, being counted towards the quorum and taking part in the proceedings at any meeting at which the decision is considered.
(5) For the purposes of this section—
(a) “conduct” includes acts and omissions;
(b) “director” includes a former director;
(c) a shadow director is treated as a director; and
(d) in section 252 (meaning of “connected person”), subsection (3) does not apply (exclusion of person who is himself a director).
(6) Nothing in this section affects—
(a) the validity of a decision taken by unanimous consent of the members of the company, or
(b) any power of the directors to agree not to sue, or to settle or release a claim made by them on behalf of the company.
(7) This section does not affect any other enactment or rule of law imposing additional requirements for valid ratification or any rule of law as to acts that are incapable of being ratified by the company.
(1) This Chapter makes provision for protecting, in the case of a company director who is an individual—
(a) information as to his usual residential address;
(b) the information that his service address is his usual residential address.
(2) That information is referred to in this Chapter as “protected information”.
(3) Information does not cease to be protected information on the individual ceasing to be a director of the company.
References in this Chapter to a director include, to that extent, a former director.
Companies Act 2006