- Transactions requiring Shareholder Approval

Fair Dealing: directors' transactions requiring shareholder approval

The Companies Act 2006 contains new provisions governing the enforcement of fair dealing by directors. The following four specific situations are instances of a potential conflict of interest that must be approved by shareholders:

• entry into a director's service contract of more than two years in duration
• transactions between the company and the director or connected person involving company assets amounting to 10% of the value of the company or £100,000 (whichever is lower);
• loans of up to £10,000 (higher amounts are still prohibited); and
• payments to directors for loss of office (including payments in connection with retirement, a share sale or business transfer) except for amounts of £200 or less or bona fide payments by way of damages for breach of contract.
  

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