Can I have private dealings with a company I am a director of?

 

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4. Can I have private dealings with a company I am a director of?

Only if permitted by the company's articles of association and having disclosed all material facts to the board so that the arrangements may be formally approved.

It is a breach of your duties as a director if you fail to declare any personal interest you have (whether direct or through someone else) in any proposed transaction or arrangement to be entered into by the company, and whether or not the director is a party to it. The declaration can be given by written notice, by a declaration at a board meeting, or by a general notice to the company that the director is to be treated as interested in any future transactions or arrangements with named third parties.

Also, unless you have already declared your interest in it when it was a proposed transaction or arrangement, a director must declare to the directors any personal interest in any existing transaction or arrangement his company has already entered into, either at a board meeting or by general notice. Failure to do so is not a breach of duty, but it is a breach of the Companies Act, making the director in breach liable to a fine.

Generally, you must not use your position to make private profits at the company's expense, for example, by accepting benefits offered to you by a third party because you are a director, and you must also declare any conflict of interest (see question 5).

The company can usually loan money to you, provided the loan is approved by the shareholders.

Any substantial private deal between you (or a person connected with you) and your company must be approved by the shareholders, eg if you sell substantial assets to the company, or it sells substantial assets to you (or, in each case, someone connected with you). The definition of the people who are connected with you is wide - take advice.