Section 205 permits a company to make a loan, or quasi-loan to a director or enter into
a credit transaction with a director of the company or of its holding company, without obtaining member approval under Sections
197-202,
to meet expenditure incurred or to be incurred by the director in
defending any criminal or civil proceedings in connection with any alleged negligence, default, breach of duty or breach of trust by him in relation to the company or an associated company, or in connection with an application for relief or to
enable such director to avoid incurring such expenditure, provided that the loan is to be repaid, or the liability of the company discharged, in the event of an unsuccessful defense of criminal or civil proceedings or refusal of relief. Such
repayment or discharge must be made no later than the date when the conviction, judgment or refusal of relief becomes final. Pursuant to Section 205(3), a conviction, judgment or refusal for relief becomes final: a) if not appealed against, at
the end of the period for bringing an appeal or b) if appealed against, when the appeal (or further appeal) is disposed of.
Section 205(4) states that an appeal is disposed of if it is determined and the period for bringing any further appeal has ended, or if
it is abandoned or otherwise ceases to have effect.
Section 205(5) provides that the reference to an application for relief in
Section 205 is to an application for relief under Section 661(3) or (4) (power of court to grant relief in case of acquisition of shares by innocent nominee) or 1157 (general power of court to grant relief in case of honest and reasonable
conduct).
Section 206 permits a company to make a loan, or quasi-loan to a director or enter into a credit transaction with a
director of the company or of its holding company, without obtaining member approval under Sections
197-202,
to meet expenditure incurred or to be incurred by the director in defending himself in an
investigation by a regulatory authority, or against action proposed to be taken by a regulatory authority, in connection with any alleged negligence, default, breach of duty or breach of trust by him in relation to the company or an associated
company, or to enable any such director to avoid incurring such expenditure.
Section 232(1) makes void any provision that purports
to exempt a director of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company.
Section 232(2) also voids any provision by which a company directly or indirectly provides an indemnity (to any extent) for a director of
a company, or of an associated company, against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company, except as permitted by:
(i) Section 233 (provision of insurance),
(ii) Section 234 (qualifying third party indemnity provision), and
(iii) Section 235 (qualifying pension scheme indemnity provision).
Section 233 permits a company to purchase and maintain insurance for a director of the company, or of an associated company, against any
liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company.
Section 234 permits a company to provide indemnity against liability incurred by the director to a person other than the company or an
associated company; provided that indemnification is not against any liability of the director to pay a fine imposed in criminal proceedings or a sum payable to a regulatory authority by way of a penalty in respect of
non-compliance
with any requirement of a regulatory nature or any liability incurred by the director in defending criminal proceedings in which he is convicted, in defending civil proceedings brought by the
company or an associated company in which judgment is given against him or in connection with an application for relief in which the court refuses to grant him relief.
Section 235 permits a company to indemnify a director of a company that is a trustee of an occupational pension scheme against liability
incurred in connection with the companys activities as trustee of the scheme; provided that indemnification is not provided against liability to pay a fine imposed in criminal proceedings or a sum payable to a regulatory authority by way of a
penalty in respect of
non-compliance
with any requirement of a regulatory nature or any liability incurred by the director in defending criminal proceedings in which he is convicted.
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