Companies Act 1985

Valid from 16/02/2001

F1 347F Remedies for breach of prohibitions on company donations etc. E+W+S

(1) This section applies where a company has made any donation or incurred any expenditure in contravention of any of the provisions of sections 347C and 347D.

(2) Every person who was a director of the company at the relevant time is liable to pay the company—

(a) the amount of the donation or expenditure made or incurred in contravention of the provisions in question; and

(b) damages in respect of any loss or damage sustained by the company as a result of the donation or expenditure having been made or incurred in contravention of those provisions.

(3) Every such person is also liable to pay the company interest on the amount mentioned in subsection (2)(a) in respect of the period—

(a) beginning with the date when the donation or expenditure was made or incurred, and

(b) ending with the date when that amount is paid to the company by any such person;

and such interest shall be payable at such rate as the Secretary of State may prescribe by regulations.

(4) Where two or more persons are subject to a particular liability arising by virtue of any provision of this section, each of those persons is jointly and severally liable.

(5) Where only part of any donation or expenditure was made or incurred in contravention of any of the provisions of sections 347C and 347D, this section applies only to so much of it as was so made or incurred.

(6) Where—

(a) this section applies as mentioned in subsection (1), and

(b) the company in question is a subsidiary of another company (“the holding company”),

then (subject to subsection (7)) subsections (2) to (5) shall, in connection with the donation or expenditure made or incurred by the subsidiary, apply in relation to the holding company as they apply in relation to the subsidiary.

(7) Those subsections do not apply in relation to the holding company if—

(a) the subsidiary is not a wholly-owned subsidiary of the holding company; and

(b) the donation or expenditure was authorised by such a resolution of the holding company as is mentioned in section 347D(2)(a).

(8) Nothing in section 727 shall apply in relation to any liability of any person arising under this section.

Textual Amendments

F1 Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)