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33 1990

COMPANIES ACT, 1990

PART III

Transactions Involving Directors

Preliminary

Interpretation of Part III .

25. —(1) In this Part, unless the context otherwise requires—

credit transactions” has the meaning assigned to it by subsection (3);

guarantee” includes indemnity;

quasi-loan” has the meaning assigned to it by subsection (2);

licensed bank” means the holder of a licence under section 9 of the Central Bank Act, 1971 .

(2) For the purposes of this Part—

(a) a quasi-loan is a transaction under which one party (“the creditor”) agrees to pay, or pays otherwise than in pursuance of an agreement, a sum for another (“the borrower”) or agrees to reimburse, or reimburses otherwise than in pursuance of an agreement, expenditure incurred by another party for another (“the borrower”)—

(i) on terms that the borrower (or a person on his behalf) will reimburse the creditor; or

(ii) in circumstances giving rise to a liability on the borrower to reimburse the creditor;

(b) any reference to the person to whom a quasi-loan is made is a reference to the borrower; and

(c) the liabilities of a borrower under a quasi-loan include the liabilities of any person who has agreed to reimburse the creditor on behalf of the borrower.

(3) For the purposes of this Part a credit transaction is a transaction under which one party (“the creditor”)—

(a) supplies any goods or sells any land under a hire-purchase agreement or conditional sale agreement;

(b) leases or licenses the use of land or hires goods in return for periodical payments;

(c) otherwise disposes of land or supplies goods or services on the understanding that payment (whether in a lump-sum or instalments or by way of periodical payments or otherwise) is to be deferred.

(4) For the purposes of this Part the value of a transaction or arrangement is—

(a) in the case of a loan, the principal of the loan;

(b) in the case of a quasi-loan, the amount, or maximum amount, which the person to whom the quasi-loan is made is liable to reimburse the creditor;

(c) in the case of a transaction or arrangement, other than a loan or quasi-loan or a transaction or arrangement within paragraph (d) or (e), the price which it is reasonable to expect could be obtained for the goods, land or services to which the transaction or arrangement relates if they had been supplied at the time the transaction or arrangement is entered into in the ordinary course of business and on the same terms (apart from price) as they have been supplied or are to be supplied under the transaction or arrangement in question;

(d) in the case of a guarantee or security, the amount guaranteed or secured;

(e) in the case of an arrangement to which section 31 (2) or 31 (3) applies the value of the transaction to which the arrangement relates less any amount by which the liabilities under the arrangement or transaction of the person for whom the transaction was made have been reduced.

(5) For the purposes of subsection (4), the value of a transaction or arrangement which is not capable of being expressed as a specific sum of money (because the amount of any liability arising under the transaction is unascertainable, or for any other reason) shall, whether or not any liability under the transaction has been reduced, be deemed to exceed £50,000.

(6) For the purposes of this Part, a transaction or arrangement is made for a person if—

(a) in the case of a loan or quasi-loan, it is made to him;

(b) in the case of a credit transaction, he is the person to whom goods or services are supplied, or land is sold or otherwise disposed of, under the transaction;

(c) in the case of a guarantee or security, it is entered into or provided in connection with a loan or quasi-loan made to him or a credit transaction made for him;

(d) in the case of an arrangement to which section 31 (2) or 31 (3) applies, the transaction to which the arrangement relates was made for him; and

(e) in the case of any other transaction or arrangement for the supply or transfer of goods, land or services (or any interest therein), he is the person to whom the goods, land or services (or the interest) are supplied or transferred.

(7) This Part, except sections 41 , 43 and 44 , does not apply to arrangements or transactions entered into before the commencement of this section but, for the purposes of determining whether an arrangement is one to which section 31 (2) or 31 (3) applies the transaction to which the arrangement relates shall, if it was entered into before the said commencement, be deemed to have been entered into thereafter.

(8) This Part shall have effect in relation to an arrangement or transaction whether governed by the law of the State or of another country.

Connected persons.

26. —(1) For the purposes of this Part, a person is connected with a director of a company if, but only if, he is—

(a) that director's spouse, parent, brother, sister or child;

(b) a person acting in his capacity as the trustee of any trust, the principal beneficiaries of which are the director, his spouse or any of his children or any body corporate which he controls; or

(c) a partner of that director;

unless that person is also a director of the company.

(2) A body corporate shall also be deemed to be connected with a director of a company if it is controlled by that director.

(3) For the purposes of this section, a director of a company shall be deemed to control a body corporate if, but only if, he is, alone or together with any of the persons referred to in paragraph (a), (b) or (c) of subsection (1), interested in more than one-half of the equity share capital of that body or entitled to exercise or control the exercise of more than one-half of the voting power at any general meeting of that body.

(4) In subsection (3)

(a) “equity share capital” has the same meaning as in section 155 of the Principal Act; and

(b) references to voting power exercised by a director shall include references to voting power exercised by another body corporate which that director controls.

(5) The provisions of section 54 shall have effect for the purposes of subsection (3) with the substitution of the words “more than half” for the words “one-third or more” in subsections (5) and (6) of that section.

Shadow directors.

27. —(1) Subject to subsection (2), a person in accordance with whose directions or instructions the directors of a company are accustomed to act (in this Act referred to as “a shadow director”) shall be treated for the purposes of this Part as a director of the company unless the directors are accustomed so to act by reason only that they do so on advice given by him in a professional capacity.

(2) A shadow director shall not be guilty of an offence under section 44 (8) by virtue only of subsection (1).

(3) Section 194 of the Principal Act shall apply in relation to a shadow director of a company as it applies in relation to a director of a company, except that the shadow director shall declare his interest, not at a meeting of the directors, but by a notice in writing to the directors which is either—

(a) a specific notice given before the date of the meeting at which, if he had been a director, the declaration would be required by subsection (2) of that section to be made; or

(b) a notice which under subsection (3) of that section falls to be treated as a sufficient declaration of that interest or would fall to be so treated apart from the proviso;

and section 145 of that Act shall have effect as if the declaration had been made at the meeting in question and had accordingly formed part of the proceedings at that meeting.

Particular transactions involving conflict of interest

Contracts of employment of directors.

28. —(1) Subject to subsection (6), a company shall not incorporate in any agreement a term to which this section applies unless the term is first approved by a resolution of the company in general meeting and, in the case of a director of a holding company, by a resolution of that company in general meeting.

(2) This section applies to any term by which a director's employment with the company of which he is the director or, where he is the director of a holding company, his employment within the group is to continue, or may be continued, otherwise than at the instance of the company (whether under the original agreement or under a new agreement entered into in pursuance of the original agreement), for a period exceeding five years during which the employment—

(a) cannot be terminated by the company by notice; or

(b) can be so terminated only in specified circumstances.

(3) In any case where—

(a) a person is or is to be employed with a company under an agreement which cannot be terminated by the company by notice or can be so terminated only in specified circumstances; and

(b) more than six months before the expiration of the period for which he is or is to be so employed, the company enters into a further agreement (otherwise than in pursuance of a right conferred by or by virtue of the original agreement on the other party thereto) under which he is to be employed with the company or, where he is a director of a holding company, within the group,

subsection (2) shall apply as if to the period for which he is to be employed under that further agreement there were added a further period equal to the unexpired period of the original agreement.

(4) A resolution of a company approving a term to which this section applies shall not be passed at a general meeting of the company unless a written memorandum setting out the proposed agreement incorporating the term is available for inspection by members of the company both—

(a) at the registered office of the company for not less than the period of 15 days ending with the date of the meeting; and

(b) at the meeting itself.

(5) A term incorporated in an agreement in contravention of this section shall to the extent that it contravenes this section be void; and that agreement and, in a case where subsection (3) applies, the original agreement shall be deemed to contain a term entitling the company to terminate it at any time by the giving of reasonable notice.

(6) No approval is required to be given under this section by any body corporate unless it is a company within the meaning of the Principal Act or registered under Part IX of that Act or if it is, for the purposes of section 150 of that Act, a wholly owned subsidiary of any body corporate, wherever incorporated.

(7) In this section—

(a) “employment” includes employment under a contract for services; and

(b) “group”, in relation to a director of a holding company, means the group which consists of that company and its subsidiaries.

Substantial property transactions involving directors, etc.

29. —(1) Subject to subsections (6), (7) and (8), a company shall not enter into an arrangement—

(a) whereby a director of the company or its holding company or a person connected with such a director acquires or is to acquire one or more non-cash assets of the requisite value from the company; or

(b) whereby the company acquires or is to acquire one or more non-cash assets of the requisite value from such a director or a person so connected;

unless the arrangement is first approved by a resolution of the company in general meeting and, if the director or connected person is a director of its holding company or a person connected with such a director, by a resolution in general meeting of the holding company.

(2) For the purposes of this section a non-cash asset is of the requisite value if at the time the arrangement in question is entered into its value is not less than £1,000 but, subject to that, exceeds £50,000 or ten per cent of the amount of the company's relevant assets, and for those purposes the amount of a company's relevant assets is—

(a) except in a case falling within paragraph (b), the value of its net assets determined by reference to the accounts prepared and laid in accordance with the requirements of section 148 of the Principal Act in respect of the last preceding financial year in respect of which such accounts were so laid;

(b) where no accounts have been prepared and laid under that section before that time, the amount of its called-up share capital.

(3) An arrangement entered into by a company in contravention of this section and any transaction entered into in pursuance of the arrangement (whether by the company or any other person) shall be voidable at the instance of the company unless—

(a) restitution of any money or any other asset which is the subject-matter of the arrangement or transaction is no longer possible or the company has been indemnified in pursuance of subsection (4) (b) by any other person for the loss or damage suffered by it; or

(b) any rights acquired bona fide for value and without actual notice of the contravention by any person who is not a party to the arrangement or transaction would be affected by its avoidance; or

(c) the arrangement is, within a reasonable period, affirmed by the company in general meeting and, if it is an arrangement for the transfer of an asset to or by a director of its holding company or a person who is connected with such a director, is so affirmed with the approval of the holding company given by a resolution in general meeting.

(4) Without prejudice to any liability imposed otherwise than by this subsection, but subject to subsection (5), where an arrangement is entered into with a company by a director of the company or its holding company or a person connected with him in contravention of this section, that director and the person so connected, and any other director of the company who authorised the arrangement or any transaction entered into in pursuance of such an arrangement, shall (whether or not it has been avoided in pursuance of subsection (3)) be liable—

(a) to account to the company for any gain which he had made directly or indirectly by the arrangement or transaction; and

(b) (jointly and severally with any other person liable under this subsection) to indemnify the company for any loss or damage resulting from the arrangement or transaction.

(5) Where an arrangement is entered into by a company and a person connected with a director of the company or its holding company in contravention of this section, that director shall not be liable under subsection (4) if he shows that he took all reasonable steps to secure the company's compliance with this section and, in any case, a person so connected and any such other director as is mentioned in that subsection shall not be so liable if he shows that, at the time the arrangement was entered into, he did not know the relevant circumstances constituting the contravention.

(6) No approval is required to be given under this section by any body corporate unless it is a company within the meaning of the Principal Act or registered under Part IX of that Act or, if it is, for the purposes of section 150 of that Act, a wholly owned subsidiary of any body corporate, wherever incorporated.

(7) Subsection (1) shall not apply in relation to any arrangement for the acquisition of a non-cash asset—

(a) if the non-cash asset in question is or is to be acquired by a holding company from any of its wholly owned subsidiaries or from a holding company by any of its wholly owned subsidiaries or by one wholly owned subsidiary of a holding company from another wholly owned subsidiary of that same holding company; or

(b) if the arrangement is entered into by a company which is being wound up unless the winding up is a members' voluntary winding up.

(8) Subsection (1) (a) shall not apply in relation to any arrangement whereby a person acquires or is to acquire an asset from a company of which he is a member if the arrangement is made with that person in his character as such member.

(9) In this section—

(a) “non-cash asset” means any property or interest in property other than cash, and for this purpose “cash” includes foreign currency;

(b) any reference to the acquisition of a non-cash asset includes a reference to the creation or extinction of an estate or interest in, or a right over, any property and also a reference to the discharge of any person's liability other than a liability for a liquidated sum; and

(c) “net assets”, in relation to a company, means the aggregate of the company's assets less the aggregate of its liabilities, and for this purpose “liabilities” includes any provision for liabilities or charges within paragraph 70 of the Schedule to the Companies (Amendment) Act, 1986 .

Penalisation of dealing by director of a company in options to buy or sell certain shares in, or debentures of, the company or associated companies.

30. —(1) A director of a company who buys—

(a) a right to call for delivery at a specified price and within a specified time of a specified number of relevant shares or a specified amount of relevant debentures; or

(b) a right to make delivery at a specified price and within a specified time of a specified number of relevant shares or a specified amount of relevant debentures; or

(c) a right (as he may elect) to call for delivery at a specified price and within a specified time or to make delivery at a specified price and within a specified time of a specified number of relevant shares or a specified amount of relevant debentures;

shall be guilty of an offence.

(2) In subsection (1)

(a) “relevant shares”, in relation to a director of a company, means shares in the company or in any other body corporate, being the company's subsidiary or holding company or a subsidiary of the company's holding company, being shares for which dealing facilities are provided by a stock exchange (whether within the State or elsewhere); and

(b) “relevant debentures”, in relation to a director of a company, means debentures of the company or of any other body corporate, being the company's subsidiary or holding company or a subsidiary of the company's holding company, being debentures as respects which there has been granted such dealing facilities as aforesaid.

(3) Nothing in this section shall be taken to penalise a person who buys a right to subscribe for shares in, or debentures of, a body corporate or buys debentures of a body corporate that confer upon the holder thereof a right to subscribe for, or to convert the debentures (in whole or in part) into, shares of the body.

(4) For the purposes of this section any reference, however expressed, to any price paid, given or received in respect of any interest in shares or debentures shall be construed as including a reference to any consideration other than money given or received in respect of any such interest, and any reference to a specified price includes a reference to a specified price range.

(5) This section shall also apply to any person (not being a director of the company) who—

(a) buys a right referred to in subsection (1), and

(b) does so on behalf or at the instigation of a director of the company.

Prohibition of loans, etc. to directors and connected persons.

31. —(1) Except as provided by sections 32 to 37 , a company shall not—

(a) make a loan or a quasi-loan to a director of the company or of its holding company or to a person connected with such a director;

(b) enter into a credit transaction as creditor for such a director or a person so connected;

(c) enter into a guarantee or provide any security in connection with a loan, quasi-loan or credit transaction made by any other person for such a director or a person so connected.

(2) A company shall not arrange for the assignment to it or the assumption by it of any rights, obligations or liabilities under a transaction which, if it had been entered into by the company, would have contravened subsection (1); but for the purposes of this Part the transaction shall be treated as having been entered into on the date of the arrangement.

(3) A company shall not take part in any arrangement whereby—

(a) another person enters into a transaction which, if it had been entered into by the company, would have contravened subsection (1) or (2); and

(b) that other person, in pursuance of the arrangement, has obtained or is to obtain any benefit from the company or its holding company or a subsidiary of the company or its holding company.

Arrangements of certain value.

32. —(1) Section 31 shall not prohibit a company from entering into an arrangement with a director or a person connected with a director if—

(a) the value of the arrangement, and

(b) the total amount outstanding under any other arrangements entered into by the company with any director of the company, or any person connected with a director,

together, is less than ten per cent of the company's relevant assets.

(2) For the purposes of this section—

(a) a company enters an arrangement with a person if it makes a loan or quasi-loan to, or enters into a credit transaction as creditor for, that person, and

(b) the amount of a company's relevant assets shall be determined in accordance with section 29 (2).

Reduction in amount of company's relevant assets.

33. —(1) This section applies to a company in respect of which the total amount outstanding under any arrangements referred to in section 32 comes to exceed 10 per cent of the company's relevant assets for any reason, but in particular because the value of those assets has fallen.

(2) Where the directors of a company become aware, or ought reasonably to become aware, that there exists a situation referred to in subsection (1), it shall be the duty of the company, its directors and any persons for whom the arrangements referred to in that subsection were made, to amend, within two months, the terms of the arrangements concerned so that the total amount outstanding under the arrangements again falls within the percentage limit referred to in that subsection.

Inter-company loans in same group.

34. —Where a company is a member of a group of companies, consisting of a holding company and its subsidiaries, section 31 shall not prohibit that company from—

(a) making a loan or quasi-loan to another member of that group; or

(b) entering into a guarantee or providing any security in connection with a loan or quasi-loan made by any person to another member of the group;

by reason only that a director of one member of the group is connected with another.

Transactions with holding company.

35. Section 31 shall not prohibit a company from—

(a) making a loan or quasi-loan to its holding company or entering into a guarantee or providing any security in connection with a loan or quasi-loan made by any person to its holding company;

(b) entering into a credit transaction as creditor for its holding company or entering into a guarantee or providing any security in connection with any credit transaction made by any other person for its holding company.

Directors' expenses.

36. —(1) Section 31 shall not prohibit a company from doing anything to provide any of its directors with funds to meet vouched expenditure properly incurred or to be incurred by him for the purposes of the company or the purpose of enabling him properly to perform his duties as an officer of the company or doing anything to enable any of its directors to avoid incurring such expenditure.

(2) Where a company enters into any transaction pursuant to subsection (1), any liability falling on any person arising from any such transaction shall be discharged by him within six months from the date on which it was incurred.

(3) A person who contravenes subsection (2) shall be guilty of an offence.

Business transactions.

37. Section 31 shall not prohibit a company from making any loan or quasi-loan or entering into any credit transaction as creditor for any person if—

(a) the company enters into the transaction concerned in the ordinary course of its business; and

(b) the value of the transaction is not greater, and the terms on which it is entered into are no more favourable, in respect of the person for whom the transaction is made, than that or those which—

(i) the company ordinarily offers, or

(ii) it is reasonable to expect the company to have offered,

to or in respect of a person of the same financial standing as that person but unconnected with the company.

Civil remedies for breach of section 31 .

38. —(1) Where a company enters into a transaction or arrangement in contravention of section 31 the transaction or arrangement shall be voidable at the instance of the company unless—

(a) restitution of any money or any other asset which is the subject matter of the arrangement or transaction is no longer possible, or the company has been indemnified in pursuance of subsection (2) (b) for the loss or damage suffered by it; or

(b) any rights acquired bona fide for value and without actual notice of the contravention by any person other than the person for whom the transaction or arrangement was made would be affected by its avoidance.

(2) Without prejudice to any liability imposed otherwise than by this subsection but subject to subsection (3), where an arrangement or transaction is made by a company for a director of the company or its holding company or person connected with such a director in contravention of section 31 , that director and the person so connected and any other director of the company who authorised the transaction or arrangement shall (whether or not it has been avoided in pursuance of subsection (1)) be liable—

(a) to account to the company for any gain which he has made directly or indirectly by the arrangement or transaction; and

(b) (jointly and severally with any other person liable under this subsection) to indemnify the company for any loss or damage resulting from the arrangement or transaction.

(3) Where an arrangement or transaction is entered into by a company and a person connected with a director of the company or its holding company in contravention of section 31 that director shall not be liable under subsection (2) if he shows that he took all reasonable steps to secure the company's compliance with that section and, in any case, a person so connected and any such other director as is mentioned in the said subsection (2) shall not be so liable if he shows that, at the time the arrangement or transaction was entered into, he did not know the relevant circumstances constituting the contravention.

Personal liability for company debts in certain cases.

39. —(1) If a company is being wound up and is unable to pay its debts, and the court considers that any arrangement of a kind described in section 32 has contributed materially to the company's inability to pay its debts or has substantially impeded the orderly winding up thereof, the court, on the application of the liquidator or any creditor or contributory of the company, may, if it thinks it proper to do so, declare that any person for whose benefit the arrangement was made shall be personally liable, without any limitation of liability, for all, or such part as may be specified by the court, of the debts and other liabilities of the company.

(2) In deciding whether to make a declaration under subsection (1), the court shall have particular regard to whether, and to what extent, any outstanding liabilities arising under any arrangement referred to in that subsection were discharged before the commencement of the winding up.

(3) In deciding the extent of any personal liability under this section, the court shall have particular regard to the extent to which the arrangement in question contributed materially to the company's inability to pay its debts or substantially impeded the orderly winding up of the company.

Criminal penalties for breach of section 31 .

40. —(1) An officer of a company who authorises or permits the company to enter into a transaction or arrangement knowing or having reasonable cause to believe that the company was thereby contravening section 31 shall be guilty of an offence.

(2) A person who procures a company to enter into a transaction or arrangement knowing or having reasonable cause to believe that the company was thereby contravening section 31 shall be guilty of an offence.

Disclosure of transactions involving directors and others

Substantial contracts, etc., with directors and others to be disclosed in accounts.

41. —(1) Subject to subsections (5) and (6) and to section 45 , group accounts prepared by a holding company in accordance with the requirements of section 150 of the Principal Act in respect of the relevant period shall contain the particulars specified in section 42 of—

(a) any transaction or arrangement of a kind described in section 31 entered into by the company or by a subsidiary of the company for a person who at any time during the relevant period was a director of the company or its holding company or was connected with such a director;

(b) any agreement by the company or by a subsidiary of the company to enter into any such transaction or arrangement for a person who at any time during the relevant period was a director of the company or its holding company or was connected with such a director;

(c) any other transaction or arrangement with the company or with a subsidiary of the company in which a person who at any time during the relevant period was a director of the company or its holding company had, directly or indirectly, a material interest.

(2) Subject as aforesaid, accounts prepared by any company other than a holding company in respect of the relevant period shall contain the particulars specified in section 42 of—

(a) any transaction or arrangement of a kind described in section 31 entered into by the company for a person who at any time during the relevant period was a director of the company or of its holding company or was connected with such a director;

(b) any agreement by the company to enter into any such transaction or arrangement for a person who at any time during the relevant period was a director of the company or of its holding company or was connected with such a director;

(c) any other transaction or arrangement with the company in which a person who at any time during the relevant period was a director of the company or of its holding company had, directly or indirectly, a material interest.

(3) Particulars which are required by subsection (1) or (2) to be contained in any accounts shall be given by way of notes to those accounts.

(4) Where by virtue of sections 150 (2) and 154 of the Principal Act a company does not produce group accounts in relation to any financial year, subsection (1) shall have effect in relation to the company and that financial year as if the word “group” were omitted.

(5) For the purposes of subsections (1) (c) and (2) (c)

(a) a transaction or arrangement between a company and a director of the company or of its holding company or a person connected with such a director shall (if it would not otherwise be so treated) be treated as a transaction, arrangement or agreement in which that director is interested; and

(b) an interest in such a transaction or arrangement is not material if in the opinion of the majority of the directors (other than that director) of the company which is preparing the accounts in question it is not material (but without prejudice to the question whether or not such an interest is material in any case where those directors have not considered the matter).

(6) Subsections (1) and (2) do not apply, for the purposes of any accounts prepared by any company which is, or is the holding company of, a licensed bank, in relation to a transaction or arrangement of a kind described in section 31 , or an agreement to enter into such a transaction or arrangement, to which that licensed bank is a party.

(7) Subsections (1) and (2) do not apply in relation to the following transactions, arrangements and agreements—

(a) a transaction, arrangement or agreement between one company and another in which a director of the first company or of its subsidiary or holding company is interested only by virtue of his being a director of the other;

(b) a contract of service between a company and one of its directors or a director of its holding company or between a director of a company and any of that company's subsidiaries;

(c) a transaction, arrangement or agreement which was not entered into during the relevant period for the accounts in question and which did not subsist at any time during that period; and

(d) a transaction, arrangement or agreement which was made before the commencement of this section and which does not subsist thereafter.

(8) Subsections (1) and (2) apply whether or not—

(a) the transaction or arrangement was prohibited by section 31;

(b) the person for whom it was made was a director of the company or was connected with a director of the company at the time it was made;

(c) in the case of a transaction or arrangement made by a company which at any time during a relevant period is a subsidiary of another company, it was a subsidiary of that other company at the time the transaction or arrangement was made.

(9) In this section and in sections 43 and 45 ,relevant period”, in relation to a company, means a financial year of the company ending not earlier than 6 months after the commencement of the section concerned.

Particulars required to be included in accounts by section 41 .

42. —The particulars of a transaction, arrangement or agreement which are required by section 41 to be included in the annual accounts prepared by a company are particulars of the principal terms of the transaction, arrangement or agreement and (without prejudice to the generality of the foregoing provision)—

(a) a statement of the fact either that the transaction, arrangement or agreement was made or subsisted, as the case may be, during the financial year in respect of which those accounts are made up;

(b) the name of the person for whom it was made, and, where that person is or was connected with a director of the company or of its holding company, the name of that director;

(c) in any case where subsection (1) (c) or (2) (c) of section 41 applies, the name of the director with the material interest and the nature of that interest;

(d) in the case of a loan or an agreement for a loan or an arrangement within section 31 (2) or 31 (3) relating to a loan—

(i) the amount of the liability of the person to whom the loan was or was agreed to be made, in respect of principal and interest, at the beginning and at the end of that period;

(ii) the maximum amount of that liability during that period;

(iii) the amount of any interest which, having fallen due, has not been paid; and

(iv) the amount of any provision (within the meaning of the Sixth Schedule to the Principal Act or the Companies (Amendment) Act, 1986 ) made in respect of any failure or anticipated failure by the borrower to repay the whole or part of the loan or to pay the whole or part of any interest thereon;

(e) in the case of a guarantee or security or an arrangement within section 31 (2) relating to a guarantee or security—

(i) the amount for which the company (or its subsidiary) was liable under the guarantee or in respect of the security both at the beginning and at the end of the financial year in question;

(ii) the maximum amount for which the company (or its subsidiary) may become so liable; and

(iii) any amount paid and any liability incurred by the company (or its subsidiary) for the purpose of fulfilling the guarantee or discharging the security (including any loss incurred by reason of the enforcement of the guarantee or security); and

(f) in the case of any transaction, arrangement or agreement, other than those mentioned in paragraphs (d) and (e) the value of the transaction or arrangement or, as the case may be, the value of the transaction or arrangement to which the agreement relates; and

(g) in the case of arrangements to which section 32 relates, the aggregate value of such arrangements at the end of the financial year concerned, in relation to any persons specified in that section, expressed as a percentage of the company's relevant assets at that time; and

(h) any amendment of the terms of any such arrangement in accordance with section 33.

Particulars of amounts outstanding to be included in accounts.

43. —(1) This section applies in relation to the following classes of transactions, arrangements and agreements—

(a) loans, guarantees and securities relating to loans, arrangements of a kind described in section 31 (2) or 31 (3) relating to loans, and agreements to enter into any of the foregoing transactions and arrangements;

(b) quasi-loans, guarantees and securities relating to quasi-loans, arrangements of a kind described in those subsections relating to quasi-loans and agreements to enter into any of the foregoing transactions and arrangements;

(c) credit transactions, guarantees and securities relating to credit transactions and arrangements of a kind described in those subsections relating to credit transactions and agreements to enter into any of the foregoing transactions and arrangements.

(2) The group accounts of a holding company prepared in accordance with the requirements of section 150 of the Principal Act and the accounts of any other company prepared in accordance with the requirements of section 148 of the Principal Act in respect of the relevant period shall contain a statement in relation to transactions, arrangements and agreements made by the company and, in the case of a holding company, by a subsidiary of the company for persons who at any time during the relevant period were officers of the company (but not directors) of the aggregate amounts outstanding at the end of the relevant period under transactions, arrangements and agreements within any paragraph of subsection (1) and the number of officers for whom the transactions, arrangements and agreements falling within each of those paragraphs were made.

(3) Subsection (2) shall not apply, in relation to the accounts prepared by any company in respect of any relevant period, to transactions, arrangements and agreements made by the company or any of its subsidiaries for any officer of the company if the aggregate amount outstanding at the end of that period under the transactions, arrangements and agreements so made for that officer does not exceed £2,500.

(4) Subsection (2) shall not apply in relation to any transaction, arrangement or agreement made by a licensed bank for any of its officers or for any of the officers of its holding company.

(5) The group accounts of a company which is, or is the holding company of, a licensed bank prepared in accordance with the requirements of section 150 of the Principal Act, and the accounts of any other company which is a licensed bank, prepared in accordance with the requirements of section 148 of the Principal Act in respect of the relevant period shall contain a statement in relation to transactions, arrangements or agreements made by the company preparing the accounts, if it is a licensed bank, and (in the case of a holding company) by any of its subsidiaries which is a licensed bank, for persons who at any time during the relevant period were directors of the company, of the aggregate amounts outstanding at the end of the relevant period under transactions, arrangements and agreements within any paragraph of subsection (1) and the number of persons for whom the transactions, arrangements and agreements falling within each of those paragraphs were made.

(6) (a) The statement referred to in subsection (5) shall also separately contain the like information as is referred to in that subsection in relation to transactions, arrangements or agreements made for persons who at any time during the relevant period were connected with a director of the company.

(b) A transaction, arrangement or agreement to which paragraph (a) applies need not be included in the statement if—

(i) it is entered into by the company concerned in the ordinary course of its business, and

(ii) its value is not greater, and its terms no more favourable, in respect of the person for whom it is made, than that or those which—

(I) the company ordinarily offers, or

(II) it is reasonable to expect the company to have offered,

to or in respect of a person of the same financial standing but unconnected with the company.

(7) Particulars which are required by subsection (2), (5) or (6) to be contained in any accounts shall be given by way of notes to those accounts.

(8) Where by virtue of sections 150 (2) and 154 of the Principal Act, a company does not produce group accounts in relation to any financial year, subsections (2), (5) and (6) shall have effect in relation to the company and that financial year as if the word “group” were omitted.

(9) Subsections (2), (5) and (6) do not apply in relation to a transaction, arrangement or agreement which was made before the commencement of this section and which does not subsist thereafter.

(10) For the purposes of this section, “amount outstanding” means the amount of the outstanding liabilities of the person for whom the transaction, arrangement or agreement in question was made, or, in the case of a guarantee or security, the amount guaranteed or secured.

Further provisions relating to licensed banks.

44. —(1) Subject to section 45 , a company which is, or is the holding company of, a licensed bank, shall maintain a register containing a copy of every transaction, arrangement or agreement of which particulars would, but for section 41 (6), be required by subsection (1) or (2) of that section to be disclosed in the company's accounts or group accounts for the current financial year and for each of the preceding ten financial years (but excluding any financial year ending prior to the passing of this Act) or, if such a transaction, arrangement or agreement is not in writing, a written memorandum setting out its terms.

(2) Subsection (1) shall not require a company to keep in its register a copy of any transaction, arrangement or agreement made for a connected person if—

(a) it is entered into in the ordinary course of the company's business, and

(b) its value is not greater, and its terms no more favourable, in respect of the person for whom it is made, than that or those which—

(i) the company ordinarily offers, or

(ii) it is reasonable to expect the company to have offered,

to or in respect of a person of the same financial standing but unconnected with the company.

(3) Subject to section 45 , a company which is, or is the holding company of, a licensed bank shall before its annual general meeting make available, at the registered office of the company for not less than the period of 15 days ending with the date of the meeting, for inspection by members of the company a statement containing the particulars of transactions, arrangements and agreements which the company would, but for section 41 (6), be required by subsection (1) or (2) of that section to disclose in its accounts or group accounts for the last complete financial year preceding that meeting and such a statement shall also be made available for inspection by the members at the annual general meeting.

(4) Subsection (3) shall not require the inclusion in the statement of particulars of any transaction, arrangement or agreement if—

(a) it is entered into in the ordinary course of the company's business, and

(b) its value is not greater, and its terms no more favourable, in respect of the person for whom it is made, than that or those which—

(i) the company ordinarily offers, or

(ii) it is reasonable to expect the company to have offered,

to or in respect of a person of the same financial standing but unconnected with the company.

(5) It shall be the duty of the auditors of the company to examine any such statement before it is made available to the members of the company in accordance with subsection (3) and to make a report to the members on that statement; and the report shall be annexed to the statement before it is made so available.

(6) A report under subsection (5) shall state whether in the opinion of the auditors the statement contains the particulars required by subsection (3) and, where their opinion is that it does not, they shall include in the report, so far as they are reasonably able to do so, a statement giving the required particulars.

(7) Subsection (3) shall not apply in relation to a licensed bank which is for the purposes of section 150 of the Principal Act the wholly owned subsidiary of a company incorporated in the State.

(8) Where a company fails to comply with subsection (1) or (3), the company and every person who at the time of that failure is a director of the company shall be guilty of an offence and liable to a fine.

(9) It shall be a defence in proceedings for an offence under subsection (8) for the defendant to prove that he took all reasonable steps for securing compliance with subsection (1) or (3), as the case may be.

Arrangements excluded from sections 41 and 44 .

45. —(1) Section 41 (1) and (2) and section 44 do not apply to arrangements of the kind mentioned in section 32 (2) entered into by a company or by a subsidiary of the company for a person who at any time during the relevant period was a director of the company or of its holding company or was connected with such a director, if the aggregate of the values of each arrangement so made for that director or any person connected with him, less the amount (if any) by which the liabilities of the person for whom the arrangement was made has been reduced, did not at any time during the relevant period exceed £2,500.

(2) Subsections (1) (c) and (2) (c) of section 41 do not apply, in relation to any accounts prepared by a company in respect of any relevant period, to any transaction or arrangement with a company or any of its subsidiaries in which a director of the company or of its holding company had, directly or indirectly, a material interest if—

(a) the value of each transaction or arrangement within subsection (1) (c) or (2) (c), as the case may be, in which that director had, directly or indirectly, a material interest and which was made after the commencement of that relevant period with the company or any of its subsidiaries; and

(b) the value of each such transaction or arrangement which was made before the commencement of that period less the amount (if any) by which the liabilities of the person for whom the transaction or arrangement was made have been reduced;

did not at any time during the relevant period exceed in the aggregate £1,000 or, if more, did not exceed £5,000 or one per cent of the value of the net assets of the company preparing the accounts in question as at the end of the relevant period for those accounts, whichever is the less and for this purpose, “net assets” has the same meaning as in section 29 (9).

Duty of auditors of company in breach of section 41 or 43 .

46. —If in the case of any group or other accounts of a company the requirements of section 41 or 43 are not complied with, it shall be the duty of the auditors of the company by whom the accounts are examined to include in their report on the balance sheet of the company, so far as they are reasonably able to do so, a statement giving the required particulars.

Disclosure by directors of interests in contracts, etc.

47. —(1) Any reference in section 194 of the Principal Act to a contract shall be construed as including a reference to any transaction or arrangement (whether or not constituting a contract) made or entered into on or after the commencement of this section.

(2) For the purposes of the said section 194, a transaction or arrangement of a kind described in section 31 made by a company for a director of the company or a person connected with such a director shall, if it would not otherwise be so treated (and whether or not prohibited by that section), be treated as a transaction or arrangement in which that director is interested.

(3) The following shall be substituted for subsection (3) of the said section 194—

“(3) Subject to subsection (4), for the purposes of this section, a general notice given to the directors of a company by a director to the effect that—

(a) he is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm; or

(b) he is to be regarded as interested in any contract which may after the date of the notice be made with a specified person who is connected with him (within the meaning of section 26 of the Companies Act, 1990),

shall be deemed to be a sufficient declaration of interest in relation to any such contract.”.

Supplemental

Power to alter financial limits under Part III .

48. —(1) The Minister may, by order, alter any of the financial limits specified in this Part.

(2) Every order made under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and if a resolution annulling the order is passed by either House within the next 21 days on which that House has sat after the order is laid before it, the order shall be annulled accordingly but without prejudice to the validity of anything previously done thereunder.

Cessation of section 192 of Principal Act.

49. —Section 192 of the Principal Act shall cease to have effect except—

(a) in relation to accounts and directors' reports prepared in respect of any financial year ending before the commencement of this section; and

(b) in relation to accounts and directors' reports prepared in respect of the first financial year ending after the commencement of this section but only in relation to loans and contracts entered into before the commencement of this section which do not subsist on or after that day.

Inspection of directors' service contracts.

50. —(1) Subject to the provisions of this section every company shall keep at an appropriate place—

(a) in the case of each director whose contract of service with the company is in writing, a copy of that contract;

(b) in the case of each director whose contract of service with the company is not in writing, a written memorandum setting out the terms of that contract;

(c) in the case of each director who is employed under a contract of service with a subsidiary of the company, a copy of that contract or, if it is not in writing, a written memorandum setting out the terms of that contract;

(d) a copy or written memorandum, as the case may be, of any variation of any contract of service referred to in paragraph (a), (b) or (c);

and all copies and memoranda kept by a company in pursuance of this subsection shall be kept at the same place.

(2) Where a contract of service is only partially in writing, paragraphs (a), (b), (c) and (d), as appropriate, of subsection (1), and subsections (4) and (5), shall also apply to such a contract.

(3) The following shall, as regards a company, be appropriate places for the purposes of subsection (1), namely—

(a) its registered office;

(b) the place where its register of members is kept if other than its registered office;

(c) its principal place of business.

(4) Every company shall send notice in the prescribed form to the registrar of companies of the place where copies and memoranda required by subsection (1) to be kept by it are kept and of any change in that place, save in a case in which they have at all times been kept at its registered office.

(5) Subsection (1) shall not apply in relation to a director's contract of service with the company or with a subsidiary of the company if that contract required him to work wholly or mainly outside the State, but the company shall keep a memorandum—

(a) in the case of a contract of service with the company, setting out the name of the director and the provisions of the contract relating to its duration;

(b) in the case of a contract of service with a subsidiary of the company setting out the name of the director, the name and place of incorporation of the subsidiary and the provisions of the contract relating to its duration,

at the same place as copies and the memoranda are kept by the company in pursuance of subsection (1).

(6) Every copy and memorandum required to be kept by subsections (1) and (5) shall, during business hours (subject to such reasonable restrictions as the company may in general meeting impose, so that not less than two hours in each day be allowed for inspection), be open to the inspection of any member of the company without charge.

(7) If default is made in complying with subsection (1) or (5) or if an inspection required under subsection (6) is refused, the company and every officer of the company who is in default shall be liable on summary conviction to a fine not exceeding £1,000, and, for continued contravention, to a daily default fine not exceeding £50 and, if default is made for 14 days in complying with subsection (4), the company and every officer of the company who is in default shall be liable to a fine not exceeding £1,000 and, for continued contravention, to a daily default fine not exceeding £50.

(8) In the case of a refusal of an inspection required under subsection (6) of a copy or memorandum the court may by order compel an immediate inspection thereof.

(9) This section shall not require to be kept a copy of, or memorandum setting out the terms of, a contract or a copy of, or memorandum setting out the terms of a variation of, a contract at a time at which the unexpired portion of the term for which the contract is to be in force is less than three years or at a time at which the contract can, within the next ensuing three years, be terminated by the company without payment of compensation.

Register of directors and secretaries.

51. —The Principal Act is hereby amended by the substitution for section 195 of the following section—

“195.— (1) Every company shall keep at its registered office a register of its directors and secretaries.

(2) Subject to subsection (3), the said register shall contain the following particulars relating to each director—

(a) his present forename and surname and any former forename and surname; and

(b) his date of birth; and

(c) his usual residential address; and

(d) his nationality; and

(e) his business occupation, if any; and

(f) particulars of any other directorships of bodies corporate, whether incorporated in the State or elsewhere, held by him or which have been held by him.

(3) It shall not be necessary for the said register to contain on any day particulars of any directorship—

(a) which has not been held by a director at any time during the ten years preceding that day;

(b) which is held or was held by a director in bodies corporate of which the company is or was the wholly owned subsidiary or which are or were the wholly owned subsidiaries either of the company or of another body corporate of which the company is or was the wholly owned subsidiary;

and for the purposes of this subsection a body corporate shall be deemed to be the wholly owned subsidiary of another if it has no members except that other and that other's wholly owned subsidiaries and its or their nominees.

(4) Subject to subsection (5), the said register shall contain the following particulars relating to the secretary or, where there are joint secretaries, in relation to each of them—

(a) in the case of an individual, his present forename and surname, any former forename and surname and his usual residential address; and

(b) in the case of a body corporate, the corporate name and registered office.

(5) Where all the partners in a firm are joint secretaries of a company, the name and principal office of the firm may be stated instead of the said particulars.

(6) The company shall, within the period of 14 days from the happening of—

(a) any change among its directors or in its secretary, or

(b) any change in any of the particulars contained in the register,

send to the registrar of companies a notification in the prescribed form of the change and of the date on which it occurred.

(7) A notification sent to the registrar of companies pursuant to subsection (6) of the appointment of a person as a director, secretary or joint secretary of a company shall be accompanied by a consent signed by that person to act as director, secretary or joint secretary, as the case may be.

(8) Without prejudice to subsection (6), a person who has ceased to be a director or secretary of a company may send to the registrar of companies a notification in the prescribed form of such cessation, and of the date on which it occurred.

(9) Subsection (6) shall not apply to any change in the particulars contained in a company's register of directors and secretaries made solely by reason of the coming into force of section 51 of the Companies Act, 1990 but if after any such change has occurred and before the company makes its next annual return, any other change in those particulars occurs, the company shall send to the registrar of companies a notification in the prescribed form of any such earlier changes and the date on which they occurred at the same time as it notifies the registrar of the later changes in accordance with this section.

(10) The register to be kept under this section shall, during business hours (subject to such reasonable restrictions as the company may by its articles or in general meeting impose, so that not less than 2 hours in each day be allowed for inspection) be open to the inspection of any member of the company without charge, and of any other person, on payment of one pound or such less sum as the company may prescribe, for each inspection.

(11) It shall be the duty of each director and secretary of a company to give information in writing to the company as soon as may be of such matters as may be necessary to enable the company to comply with this section.

(12) If any inspection required under this section is refused or if default is made in complying with subsection (1), (2), (4), (6) or (7), the company and every officer of the company who is in default shall be liable to a fine not exceeding £1,000 and, for continued contravention, to a daily default fine not exceeding £50.

(13) In the case of any such refusal, the court may by order compel an immediate inspection of the register.

(14) A person who fails to comply with subsection (11) shall be guilty of an offence and liable to a fine.

(15) For the purposes of this section—

(a) in the case of a person usually known by a title different from his surname, the expression ‘surname’ means that title;

(b) references to a ‘former forename’ or ‘surname’ do not include—

(i) in the case of a person usually known by a title different from his surname, the name by which he was known previous to the adoption of or succession to the title; or

(ii) in the case of any person, a former forename or surname where that name or surname was changed or disused before the person bearing the name attained the age of 18 years or has been changed or disused for a period of not less than 20 years; or

(iii) in the case of a married woman, the name or surname by which she was known previous to the marriage.”.

Directors to have regard to interests of employees.

52. —(1) The matters to which the directors of a company are to have regard in the performance of their functions shall include the interests of the company's employees in general, as well as the interests of its members.

(2) Accordingly, the duty imposed by this section on the directors shall be owed by them to the company (and the company alone) and shall be enforceable in the same way as any other fiduciary duty owed to a company by its directors.