Part X Enforcement of Fair Dealing by Directors
Restrictions on a company’s power to make loans, etc., to directors and persons connected with them
C1330 General restriction on loans etc. to directors and persons connected with them.
1
The prohibitions listed below in this section are subject to the exceptions in sections 332 to 338.
2
A company shall not—
a
make a loan to a director of the company or of its holding company;
b
enter into any guarantee or provide any security in connection with a loan made by any person to such a director.
3
A relevant company shall not—
a
make a quasi-loan to a director of the company or of its holding company;
b
make a loan or a quasi-loan to a person connected with such a director;
c
enter into a guarantee or provide any security in connection with a loan or quasi-loan made by any other person for such a director or a person so connected.
4
A relevant company shall not—
a
enter into a credit transaction as creditor for such a director or a person so connected;
b
enter into any guarantee or provide any security in connection with a credit transaction made by any other person for such a director or a person so connected.
5
For purposes of sections 330 to 346, a shadow director is treated as a director.
6
A company shall not arrange for the assignment to it, or the assumption by it, of any rights, obligations or liabilities under a transaction which, if it had been entered into by the company, would have contravened subsection (2), (3) or (4); but for the purposes of sections 330 to 347 the transaction is to be treated as having been entered into on the date of the arrangement.
7
A company shall not take part in any arrangement whereby—
a
another person enters into a transaction which, if it had been entered into by the company, would have contravened any of subsections (2), (3), (4) or (6); and
b
that other person, in pursuance of the arrangement, has obtained or is to obtain any benefit from the company or its holding company or a subsidiary of the company or its holding company.