C5Part 10A company's directors
Chapter 6Contracts with sole members who are directors
C1C2C3C4231Contract with sole member who is also a director
1
This section applies where—
a
a limited company having only one member enters into a contract with the sole member,
b
the sole member is also a director of the company, and
c
the contract is not entered into in the ordinary course of the company's business.
2
The company must, unless the contract is in writing, ensure that the terms of the contract are either—
a
set out in a written memorandum, or
b
recorded in the minutes of the first meeting of the directors of the company following the making of the contract.
3
If a company fails to comply with this section an offence is committed by every officer of the company who is in default.
4
A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
5
For the purposes of this section a shadow director is treated as a director.
6
Failure to comply with this section in relation to a contract does not affect the validity of the contract.
7
Nothing in this section shall be read as excluding the operation of any other enactment or rule of law applying to contracts between a company and a director of the company.
Pts. 1-39 (except for Pt. 7 and ss. 662-669), 45-47 extended (12.5.2011) by The Companies Act 2006 (Consequential Amendments and Transitional Provisions) Order 2011 (S.I. 2011/1265), art. 5(1), Sch. 1 para. 2