Company directors are reminded that new provisions under the Companies Act 2006, relating to transactions between companies and their directors, came into force on 1 October 2007. These relate to transactions involving directors and their associates (the definition of which has been expanded) in the areas of:
- contracts of service;
- loans, ‘quasi-loans’ and credit agreements;
- payments for loss of office; and
- transactions involving assets of substantial value.
In general, these will need to be approved by the shareholders.
There are several exceptions. For example, a director’s contractual entitlement to compensation under his or her contract of service need not be approved by shareholders. Most transactions involving a director and a non-UK subsidiary also do not require shareholder approval. Shareholders do have the right to request a copy of a director’s service contract on payment of an appropriate fee.
There are also substantial changes to the rules governing proxy rights (the rights of proxies are increased substantially) and amendments to the rules dealing with the calling of general meetings, which have been relaxed.
We can advise you to help you ensure your company procedures comply with the provisions of the Companies Act.