C6C5Part 10A company's directors

Annotations:
Modifications etc. (not altering text)
C6

Pts. 1-39 modified (31.12.2020) by Regulation (EC) No. 2157/2001, Art. AAA1(3) (as inserted by The European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1298), regs. 1, 97 (with regs. 140-145) (as amended by S.I. 2020/523, regs. 1(2), 5(a)-(f)); 2020 c. 1, Sch. 5 para. 1(1))

Chapter 6Contracts with sole members who are directors

C1C2C3C4C7231Contract with sole member who is also a director

1

This section applies where—

a

a limited company having only one member enters into a contract with the sole member,

b

the sole member is also a director of the company, and

c

the contract is not entered into in the ordinary course of the company's business.

2

The company must, unless the contract is in writing, ensure that the terms of the contract are either—

a

set out in a written memorandum, or

b

recorded in the minutes of the first meeting of the directors of the company following the making of the contract.

3

If a company fails to comply with this section an offence is committed by every officer of the company who is in default.

4

A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale.

5

For the purposes of this section a shadow director is treated as a director.

6

Failure to comply with this section in relation to a contract does not affect the validity of the contract.

7

Nothing in this section shall be read as excluding the operation of any other enactment or rule of law applying to contracts between a company and a director of the company.