In January 2023, a seller was ordered by the Court to pay legal costs and damages to his buyer in the sum £200,000 and he may have to sell his...
The Companies Act 2006 in relation to substantial property transactions
We have been working on a client matter that highlights the requirements of s190 of the Companies Act 2006 in relation to substantial property transactions that require members’ approval. This is something that should be remembered when a director or connected party is involved in a property transaction with the company. The relevant sections of s190 are below:
s190 Substantial property transactions: requirement of members’ approval
(1)A company may not enter into an arrangement under which—
(a)a director of the company or of its holding company, or a person connected with such a director, acquires or is to acquire from the company (directly or indirectly) a substantial non-cash asset, or
(b)the company acquires or is to acquire a substantial non-cash asset (directly or indirectly) from such a director or a person so connected, unless the arrangement has been approved by a resolution of the members of the company or is conditional on such approval being obtained.
For the meaning of “substantial non-cash asset” see section 191.
(2)If the director or connected person is a director of the company’s holding company or a person connected with such a director, the arrangement must also have been approved by a resolution of the members of the holding company or be conditional on such approval being obtained.
Substantial property transactions require approval from members. Shareholder approval can be given:
– before the transaction is entered into; or
– after the transaction has been agreed provided the transaction is conditional on members’ approval being granted.
Such a resolution can be passed as an ordinary resolution unless the company’s articles require a higher approval level (such as a special resolution).
If such a transaction is or might be taking place please contact email@example.com