Transactions with directors

The Companies Act 2006 (CA 2006) sets out four types of transactions with directors that require member approval:

•
long-term service contracts
•
substantial property transactions
•
loans, quasi-loans, credit transactions and related arrangements, and
•
payments for a director’s loss of office

Approval is required for such transactions because they involve directors (or their connected persons) and are considered to be particularly open to abuse.

In addition to the requirements of CA 2006, if the company is listed it will also have to comply with the UK Listing Rules (UKLR) governing related party transactions.

Long-term service contracts

A company may not agree to a provision within a director’s service contract pursuant to which the guaranteed term of the director’s employment:

•
with a company of which he is a director, or
•
where he is a director of a holding company, within the group consisting of the company and its subsidiaries,

is, or may be, for a guaranteed term of longer than two years unless it has been approved:

•
by a resolution of the members of the company, and
•
in

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