Director's transactions requiring members approval
The Companies Act specifies a number of transactions that require shareholder approval.
1. Where a service contract is, or maybe, longer than two years.
This is a complicated area of the Act and we recommend that advice be sought with regard to long term service contracts.
2. Substantial property transactions.
A company may not enter into an arrangement under which a director of the company or its holding company, or a person connected with such director, acquires or is to acquire from the company (directly or indirectly) a substantial non-cash asset, or the company acquires or is to acquire a substantial non-cash asset (directly or indirectly) from such a director or a person so connected. These provisions apply unless the arrangement has been approved by a resolution of the members of the company or is conditional on such approval being obtained. Substantial is defined in section 191 as an asset that exceeds 10% of the company's asset value and is more than £5,000 or exceeds the sum of £100,000.
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