If a company or its holding company, proposes to acquire or sell to a director or a connected person (to a director), a non-cash asset of the company in value exceeding €65,000 or 10 per cent of the company’s net assets per the last financial statements, the arrangement must be first approved by the shareholders in general meeting.
If the director or connected person is a director of the holding company or person connected with such a director, the arrangement must be also approved by a general meeting of the holding company. A transaction entered in breach of this requirement is void at the application of the company.
There are exceptions, including in particular for intra-group transactions, where the connection with a director is derived from his shareholding in another group company.
A company is generally prohibited from making a loan or a loan like an arrangement to a director of the company or its holding company or person connected with either such category of director. A company is also prohibited from entering a credit transaction as a creditor for such a director or a person connected, or from entering a guarantee or providing security in connection with such a loan or loan like arrangement or credit transaction or arranging for the assignment to it, of any rights or obligations of such a transaction. Breach of the provision is a category two offence.
There are a number of exceptions
- the value of the arrangement is less than 10% of the company’s net assets per the last financial statements
- in the case of a private company it was approved by the shareholers under the summary approval procedure
- the arrangement is a transaction between companies in a group of companies (which might otherwise be deemed connected with a director)
- properly vouched expenses incurred for the purposes of the company or in the performance of the directors’ duties.