Payments for a director’s loss of office—transfer of an undertaking

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

  • Payments for a director’s loss of office—transfer of an undertaking
  • Meaning of ‘payment for loss of office’
  • Amounts deemed to be payments for loss of office in connection with a transfer of the company’s undertaking or property
  • Requirement to obtain shareholder approval
  • Approval of members
  • Multiple approval requirements
  • Exceptions to the requirement to obtain member approval
  • Exceptions for certain companies
  • Exceptions for payments in discharge of certain obligations
  • Exceptions for small payments
  • More...

Payments for a director’s loss of office—transfer of an undertaking

The Companies Act 2006 (CA 2006) contains provisions that require payments made by a company to a director for loss of office in connection with the transfer of the whole or any part of the undertaking or property of the company to be approved by the members of the company.

Shareholder approval is required for such transactions as they involve directors and are considered to be particularly open to abuse. The relationship between the statutory provisions requiring approval of such a transaction and the general statutory duties of a director is discussed in Practice Note: Directors' duties—scope, nature, interpretation and application.

One of the general duties of a director set out in statute is the duty of a director to declare to the board if they are in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company of which he is a director, and the nature and extent of that interest, to the other directors.

In relation to:

  1. the obligation to declare an interest in a transaction or arrangement with the company of which he is a director, see Practice Note: Declaration of a director's interests—the statutory provisions, and

  2. a director’s ability to participate, either as a director or a member, in decisions regarding such a transaction or arrangement, see Practice Note:

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