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Director's transactions requiring members approval

The Companies Act specifies a number of transactions that require shareholder approval.

1. Where a service contract is, or maybe, longer than two years.

This is a complicated area of the Act and we recommend that advice be sought with regard to long term service contracts.

2. Substantial property transactions.

A company may not enter into an arrangement under which a director of the company or its holding company, or a person connected with such director, acquires or is to acquire from the company (directly or indirectly) a substantial non-cash asset, or the company acquires or is to acquire a substantial non-cash asset (directly or indirectly) from such a director or a person so connected. These provisions apply unless the arrangement has been approved by a resolution of the members of the company or is conditional on such approval being obtained. Substantial is defined in section 191 as an asset that exceeds 10% of the company's asset value and is more than £5,000 or exceeds the sum of £100,000.

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Knowles Warwick Financial Services Limited is authorised and regulated by the Financial Conduct Authority (in respect of regulated investment, insurance and mortgage business). For regulated financial services, the Financial Ombudsman Service is the alternative dispute resolution provider.