New Section 347H : Exemption of directors from liability in respect of unauthorised donations or expenditure
268.Section 347H provides that, when proceedings are brought against a director or former director in respect of unauthorised donations or expenditure, it is a defence for the director to show that:
the amount involved in any unauthorised transaction has been repaid to the relevant company, together with any interest on that amount up to the date of repayment;
the repayment has been approved by the company in general meeting;
the notice of the resolution to be submitted to that meeting disclosed in full the circumstances in which the unauthorised transaction occurred and the circumstances and source of the repayment made to the company.
269.Subsection (2) provides that, in the case of directors of a holding company, it will be a defence to show in relation to unauthorised transactions by a subsidiary company that:
the unauthorised amount has been repaid, together with any interest on that amount up to the date of repayment;
the repayment has been approved by both the subsidiary and the holding company in general meeting;
the notice of the resolution to be submitted to each of those meetings disclosed in full the circumstances in which the unauthorised transaction occurred and the circumstances and source of the repayment made to the company.
270.Subsection (3) provides that, in the case of a wholly-owned subsidiary of the holding company, it is not necessary for the repayment to be approved by the subsidiary company in general meeting.
271.Subsection (4) provides that, in the case of directors of a holding company, it is a defence to show that proceedings have been commenced by the subsidiary against its directors and are being pursued with due diligence by that company unless the subsidiary is wholly owned. Under subsection (5), this defence may only be raised with the leave of the court which may make, on such application for leave, such order as the court thinks fit, including an order adjourning or permitting the continuance of the action on such terms and conditions as the court thinks fit.
272.Subsection (6) provides that it is a defence for directors of a holding company of a subsidiary incorporated outside Great Britain to show that:
the unauthorised amount has been repaid to the subsidiary undertaking, together with any interest on that amount up to the date of repayment;
the repayment has been approved by the holding company in general meeting;
the notice of the resolution to be submitted to that meeting disclosed in full the circumstances in which the unauthorised transaction occurred and the circumstances and source of the repayment made to the company.