Q&As

Is shareholder approval required where a director shareholder makes a loan to his company and takes a legal charge over company property?

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Published on LexisPSL on 21/12/2016

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • Is shareholder approval required where a director shareholder makes a loan to his company and takes a legal charge over company property?

If the individual making the loan and taking a charge over company property is a director of the company (or its holding company), the transaction may (depending on the particular facts) amount to a substantial property transaction (SPT) requiring shareholder approval by ordinary resolution under sections 190 to 194 of the Companies Act 2006 (CA 2006).

The CA 2006 contains provisions that restrict and control SPTs entered into between a company and its directors. The term SPT includes an arrangement under which a substantial non-cash asset is acquired or is to be acquired (directly or indirectly) from a company by a director of that company or a director

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