(1)This section applies in respect of any term of an agreement whereby a director’s employment with the company of which he is a director or, where he is the director of a holding company, his employment within the group is to continue, or may be continued, otherwise than at the instance of the company (whether under the original agreement or under a new agreement entered into in pursuance of it), for a period of more than 5 years during which the employment—
(a)cannot be terminated by the company by notice; or
(b)can be so terminated only in specified circumstances.
(2)In any case where—
(a)a person is or is to be employed with a company under an agreement which cannot be terminated by the company by notice or can be so terminated only in specified circumstances; and
(b)more than 6 months before the expiration of the period for which he is or is to be so employed, the company enters into a further agreement (otherwise than in pursuance of a right conferred by or under the original agreement on the other party to it) under which he is to be employed with the company or, where he is a director of a holding company, within the group,
this section applies as if to the period for which he is to be employed under that further agreement there were added a further period equal to the unexpired period of the original agreement.
(3)A company shall not incorporate in an agreement such a term as is mentioned in subsection (1), unless the term is first approved by a resolution of the company in general meeting and, in the case of a director of a holding company, by a resolution of that company in general meeting.
(4)No approval is required to be given under this section by any body corporate unless it is a company within the meaning of this Act, or is registered under section 680, or if it is a wholly-owned subsidiary of any body corporate, wherever incorporated.
(5)A resolution of a company approving such a term as is mentioned in subsection (1) shall not be passed at a general meeting of the company unless a written memorandum setting out the proposed agreement incorporating the term is available for inspection by members of the company both—
(a)at the company’s registered office for not less than 15 days ending with the date of the meeting;
and
(b)at the meeting itself.
(6)A term incorporated in an agreement in contravention of this section is, to the extent that it contravenes the section, void; and that agreement and, in a case where subsection (2) applies, the original agreement are deemed to contain a term entitling the company to terminate it at any time by the giving of reasonable notice.
(7)In this section—
(a)“employment” includes employment under a contract for services; and
(b)“group”, in relation to a director of a holding company, means the group which consists of that company and its subsidiaries;
and for purposes of this section a shadow director is treated as a director.
Modifications etc. (not altering text)
C1S. 319(3) restricted (E.W.) (1.1.1993) by Charities Act 1960 (c. 58), s. 30BA(2)(c) (as inserted (1.1.1993) by Charities Act 1992 (c. 41), s.41; S.I. 1992/1900, art. 4, Sch. 3).
S. 319(3) restricted (E.W.) (1.8.1993) by 1993 c. 10, ss. 66(1)(2)(c), 99(1)