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Companies (Audit, Investigations and Community Enterprise) Act 2004

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This is the original version (as it was originally enacted).

20Funding of director’s expenditure on defending proceedings

This section has no associated Explanatory Notes

After section 337 of the Companies Act 1985 (c. 6) insert—

337AFunding of director’s expenditure on defending proceedings

(1)A company is not prohibited by section 330 from doing anything to provide a director with funds to meet expenditure incurred or to be incurred by him—

(a)in defending any criminal or civil proceedings, or

(b)in connection with any application under any of the provisions mentioned in subsection (2).

(2)The provisions are—

  • section 144(3) and (4) (acquisition of shares by innocent nominee), and

  • section 727 (general power to grant relief in case of honest and reasonable conduct).

(3)Nor does section 330 prohibit a company from doing anything to enable a director to avoid incurring such expenditure.

(4)Subsections (1) and (3) only apply to a loan or other thing done as mentioned in those subsections if the terms on which it is made or done will result in the loan falling to be repaid, or any liability of the company under any transaction connected with the thing in question falling to be discharged, not later than—

(a)in the event of the director being convicted in the proceedings, the date when the conviction becomes final,

(b)in the event of judgment being given against him in the proceedings, the date when the judgment becomes final, or

(c)in the event of the court refusing to grant him relief on the application, the date when the refusal of relief becomes final.

(5)For the purposes of subsection (4) a conviction, judgment or refusal of relief becomes final—

(a)if not appealed against, at the end of the period for bringing an appeal, or

(b)if appealed against, at the time when the appeal (or any further appeal) is disposed of.

(6)An appeal is disposed of—

(a)if it is determined and the period for bringing any further appeal has ended, or

(b)if it is abandoned or otherwise ceases to have effect.

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