SPT/ LOANS Flashcards
what is a substantial property transfer? what is required?
Approval by ordinary resolution is required if substantial property (non- cash asset) of the company is give by/ to:
- director
- connected person
- a director of a holding company (approval must be given by the SHs of the HC)
approval is given before/ after transaction, provided transaction is conditioned on approval
what is deemed as substantial property?
- £5k< not SP
- £100> sp
- Between £5k-£100k is substantial if its 10% of net asset value based on last accounts
Who is connected person
family: spouse, CP, parents children/ step children
DOES NOT INCLUDE: Siblings, aunts, uncle, grandparents
when is persmission for SPT not required?
- wholly owned subsidiary
- selling shares back to company
What remedies are available for failing to get SH approval of SPT
transfer is voidable unless:
1. restitution is not possible
2. company has been indemnified
3. rights acquired by a party in good faith would be affected
D and CP are liable to account to the company for any profits made and to indemnity the company for losses incurred
shareholders can affirm via OR
what defence is available for D and CPT for SPT
D- shows that they took all reasonable steps to ensure that the company’s compliance with s190
CP- no knowledge of the circumstances constituting contravention
what defence is available for D and CPT for SPT
D- shows that they took all reasonable steps to ensure that the company’s compliance with s190
CP- no knowledge of the circumstances constituting contravention
What are the disclosiure requirements?
D will need to disclose the nature and extent of interest to the board
exception- Ds were already aware, but good practice
D cannot vote or count for quorum
What are the disclosiure requirements?
D will need to disclose the nature and extent of interest to the board
exception- Ds were already aware, but good practice
D cannot vote or count for quorum
What loans/. transactions to directors, holding company directors and connected person require approval? what approval?
OR
- Loans/ guarantees: company lends money or is guarantee
- quasi loans: company pays third party, D pays back Company
- credit transaction: Company provides goods and services for D, D later pays back
- guarantees/ security for the above
What transactions are limited for all companies with OR?
Loans, guarantees, security for D
what transactions are not restricted for a private company?
loans to connected persons
what transactions are further restricted for public companies and private companies associated with public?
- loans to person connected to D, DHC
- Quasi loans, D, DHC, CP
- credit transaction, D, DHC, CP
- guarantee or security in relation to such loans/ credit transition with D, DHC, or CP
Explain the HC and the wholly wonder subsidiary exemption
HC- only HC needs to approve where transaction is between HCD, HCD CP.
subsidiary giving loan will not need to approve
wholly owned subsidiary- approval of WOS not required
what transactions are exempt from requiring SH approval? (7)
- Expenditure on company (50k)
- Loans for defending proceedings against D
- Loans for defending regulatory action or investigations
- loans/ quasis loans unto 10k
- credit transactions up to 15
6.intra group transactions - Money lending companies
