Transactions with directors - payments for loss of office

Question 1

what payments need approval?

Answer 1

Payments made to D, former D or connected person for loss of office (inc. as compensation and retirement) require approval unless an exception applies

Question 2

what are the exceptions? (7)

Answer 2

o The company is not registered in the UK
o It is a wholly owned subsidiary
o Payment of a pre-agreed severance clause (i.e. before the decision to terminate)
o Payment is for the company’s breach of contract (i.e. unfair dismissal)
o Settlement payment made in good faith
o Pension payment
o The payment does not exceed £200

Question 3

what are the pre-decision requirements?

Answer 3

Terms of payment must be circulated with the WR or at the registered office for 15 days before the GM and at the GM

Question 4

what is the effect if approval is not obtained?

Answer 4

the recipient holds the money on trust for the company + D(s) who authorised the payment are jointly and severally liable to the company