LPC - Business Law and Practice - Director's Duties: Loans to Directors, Exams of Banking Law and Practice

Download LPC - Business Law and Practice - Director's Duties: Loans to Directors and more Exams Banking Law and Practice in PDF only on Docsity! LPC - Business Law and Practice - Director's Duties: Loans to Directors s 239 (CA '06) - ANS>answers>*Ratification* ...(2) Can ratify a Dir's default by resolution. (3) When using written res., Dir in question cannot vote on the ratification, nor connected persons (4) When using ord. res., dir can't vote but can attend and speak at meeting s252 (CA '06) - ANS>answers>*Persons connected with a dir* (2) Connected persons; family, a "body corporate" dir. is connected to; Trustee of which dir. is a beneficiary (or a connected person); A person acting as dir.s partner a firm that is a legal person of which a dir. is a partner s253 (CA '06) - ANS>answers>*Members of a dir/s family* (2) spouse; girlf/boyf; (step)children, other dependents, parents s254 (CA '06) - ANS>answers>*Dir. "connected with" a body corporate* (2) To be "connected", dir. and his connected people must control *at least* 20% of votes or nominal value of shares in the body corporate s182 (CA '06) - ANS>answers>*Declarations of interest (in transaction/ arrangement)* (1) Must declare interests, both nature an dextent to the other dirs. (2) 3 ways to declare; gen. notice, writing, or at a meeting (3) Must give a new notice to extent the old one is inaccurate/ incomplete (4) Must declare as soon as reasonably practical (5) No need to declare when matter is not reasonably known about (6) No need to declare when; (a) there's no conflict of interest (b) dir/s already reasonably aware of conflict (c) it concerns that dirs.'s service contract. s183 (CA '06) - ANS>answers>*Offence of failure to declare interest* s184 (CA '06) - ANS>answers>*Declaration by notice in writing* (2) Must send writing to the other directors. (By hard copy form, or if agreed, soft copy (4) Should send by hand, post, or if agreed, electronically (5) Such notices are deemed to be made at the next BM s185 (CA '06) - ANS>answers>*Declaration by general notice* (2) General notice is notice to the other dirs that (a) the dir. has an interest or (b) he's connected with a person who has an interest. (3) Must also state the nature and extent and/or nature of his connection with a connected person (4) Must give this notice at a BM OR reasonable steps are taken to ensure it's brought up at a BM. s190 (CA '06) - ANS>answers>*Substantial property transactions: requirement of members' approval* (1) Can't enter into an arrangement for (a) getting a "substantial" non-cash asset from a direcotrs other company or (b) from the dir. himself, or any connected persons Unless you get approval (2) If it's a dir's holding company, that company must also approve (3) Co. is not liable for want of approval in this section (4) No need for approval by foriegn Co.s or wholly owned subsids Can't arrange a loan/ quasi loan/ credit transaction for someone else and then assign it over to a director to avoid the rules s204 (CA '06) - ANS>answers>*Exception for expenditure on company business* No approval needed for loans etc as long as the arrangement is to further business. No more than £50,000 (inc. related transactions) s205 (CA '06) - ANS>answers>*Exception for defence against proceeedings* No approval needed for loans etc as long as the arrangement is to defend against actions based on company wrongs s206 (CA '06) - ANS>answers>*Exception for defence from regulatory investigations* As with the proceedings exception s207 (CA '06) - ANS>answers>*Exceptions for minor and business transactions* (1) No approval needed for loans or quasi loans (inc related transactions) when no more than *£10,000* (2) No approval needed for credit transactions (inc related transactions) when no more than *£15,000* (3) No approval for credit transactions if (a) it's a money-lending company and (b) the terms are the same as "normal business" s208 (CA '06) - ANS>answers>*Intra-group transactions do not need approval* s209 (CA '06) - ANS>answers>*Exceptions for money lending companies* (1) Approval not required for laons/quasi loans with money-lending businesses if (a) the transaction is normal for the company (b) the terms are the same as "normal business" (2) "Money lending business" means giving out loans/ quasi loans or giving sercurity over these s1159 (CA '06) - ANS>answers>*Meaning of "subsidiary"* (1) Majority voting rights; (2) Controlds majority of the Board... s413 (CA '06) - ANS>answers>*Information about dir.s benefits: advances, credits, guarantees* Must show details of any of the above in the notes to the (1) individual or (2) group accounts as the case may be (3) Loans, advances, credits; must show amount, interest rate, conditions and amounts repaid (4) Guarantees; must show main terms, maximum liability and amounts paid/ liabilities incurred s210 (CA '06) - ANS>answers>*Other relevant transactions or arrangements* (2) Relevant transactions are those previously entered into or done at the same time as the transaction in question, IN RELATION TO THE FOLLOWING; (3) Transactions for a dir/ connected person are deemed to be for the dir (4) Transactions for dirs of a holding co/ connected person are deemed to be for the dir (5) NOT the case for transactions benefitting a subsidiary company s211 (CA '06) - ANS>answers>*Value of transactions* (2) value of a "loan" = the principal (3) value of a "quasi-loan" = the maximum about reimbursabel to the creditor (4) value of a "credit transaction" = the reasonable price of the goods/ services/ land supplied under the arrangement on the same terms as the actual transaction (5) value of a guarantee = the amount secured (6) value of a "related arrangement" is the value of the transaction (duh) (7) If the value is not quantifiable = £50,000 s212 (CA '06) - ANS>answers>*The person for whom a transaction is entered into* The beneficiary of the arrangement s213 (CA '06) - ANS>answers>*Loans etc: consequences of contravention* (2) Voidable at the instance of the company UNLESS (a) restitution is impossible (b) Co. has been indemnified (c) A third party equity's darling would be affected by the avoidance (3) The people in (4) must; (a) account to Co. for any gain; (b) jointly & severally indemnify the Co. for any loss/ damage (4) The persons are; (a) the dir.(s) who breached s190; (b) connected parties (c) dir.s of connected holding companies (d) Other dir.s who authorised the arrangement (6) Exception to (4)(c); if the dir. took all reasonable steps to ensure the holding companies' compliance (7) No liability if dir did not know the relevant circumstances consituting the contracvention.