Declaration of interest

Declaration of interest

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Client is a director of two companies.  One of the companies (Company A) (client is the sole director) owns 50 shares in the other company (Company B) (two more directors as well as client also have 50 shares each) but is selling these shares to the director.

Is it just Company A that will require minutes re the transfer of shares to the director and will the director be required to make a declaration of interest?

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By johngroganjga
28th Jan 2015 13:41

Not very clear

Who is selling what to your client?

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By 1chillibass
28th Jan 2015 14:37

Sorry, I'll try again....

Company A (in which client is sole director and shareholder) is selling 50 shares in Company B to client (who is a director in Company B also, along with 2 other directors). The other 2 directors of Company B own 50 shares each.

Who should be preparing minutes and should there be a declaration of interest by the sole director of Company A or as the sole director, will he be treated as being reasonably aware of any other interests?

 

 

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By TerryD
28th Jan 2015 15:00

If the investment held by Company A constitutes a substantial non-cash asset as defined by s. 191, then Company A needs a members' resolution to approve the transaction. Personally, though, I'd recommend a minute anyway to avoid any possibility of a complaint about under-value, etc, later. The director, if he is a member of company A, will need to declare an interest and not vote.

Company B will need a directors' minute to authorise the share transfer.

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By johngroganjga
28th Jan 2015 16:59

Yes but we are told that the director is the sole shareholder of A, so if he can't vote A is hamstrung and can't effect the disposal of its shareholding!  And the only person he can declare his interest in the transaction to is himself.

The point that has not been mentioned is that if B has the normal private company Articles its board will have to approve the transfer of 50% of its shares, and the director in question will obviously have to declare his interest and not vote.

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By TerryD
28th Jan 2015 17:09

Oh, yes - sorry, I missed the point about him being sole shareholder. I think in that case, he'll have to follow the s. 231 procedures and prepare a written memorandum of the contract for sale of the shares and have that approved by the directors.

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By johngroganjga
28th Jan 2015 17:33

But he's also the sole director of A!

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By TerryD
28th Jan 2015 17:42

A sole director can bind the "board". So I guess, at the end of the day, he can do what he likes with A Ltd! So long as he writes a few things down.

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