Credit transactions for the benefit of directors—consequences of a failure to obtain members’ approval
Credit transactions for the benefit of directors—consequences of a failure to obtain members’ approval

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Credit transactions for the benefit of directors—consequences of a failure to obtain members’ approval
  • Consequences of a failure to obtain members' approval of a credit transaction for the benefit of a director or connected person and related arrangements
  • Voidable transaction or arrangement
  • Liability of directors and connected persons

The Companies Act 2006 (CA 2006) contains provisions relating to the consequences of a failure to obtain the required members' approval of credit transactions made by a company for the benefit of directors, persons connected with directors and related arrangements.

For further information about the requirement for members' approval, including details on key transitional provisions, see Practice Note: Credit transactions for the benefit of a director, a connected person and related arrangements—requirement to obtain members’ approval.

The term 'director' for the purposes of these statutory provisions includes any person occupying the position of director by whatever name called and a shadow director.

If the company making the credit transaction is a listed company, the rules on related party transactions may apply, see Practice Note: Related party transactions—listed companies.

Consequences of a failure to obtain members' approval of a credit transaction for the benefit of a director or connected person and related arrangements

The statutory provisions setting out the consequences of a failure to obtain members' approval of a credit transaction for the benefit of a director or person connected with a director and related arrangements (transaction or arrangement) do not exclude the operation of any other enactment or rule of law by virtue of which: