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.