SUBSTANTIAL PROPERTY TRANSACTIONS | COMPANIES ACT 2006
Regulation over SPTs is a further example from the CA of controlling situations where directors have an actual
or potential conflict of interest with their company, in addition to that imposed under the duty to declare interest
in transactions under s177. Because of the nature of an SPT and the amount of money involved, the shareholders
have veto over whether the company should enter into an SPT.
CA 2006, s190(1)
If a director in his personal capacity, or someone connected to him, buys something from or sells
something to the company, the consent of the shareholders by resolution is necessary if the asset
is of non-cash nature, and is deemed to be substantial.
Requirements
Before a matter constitutes an SPT, there must be:
a) An arrangement/ transaction
b) Between the company and:
i) One of its directors, or
ii) A person connected with such a director, or
iii) One of its holding company directors, or
iv) A person connected with a holding company director
c) Involving the acquisition of a non-cash asset (NCA)
d) That is substantial
If all of the above are met, there will be an SPT and shareholder approval is required.
STEP 1 Identify an Arrangement
This usually will involve a contract between parties, for example to buy land.
STEP 2 Identify the Parties
There are 4 possibilities, as above. The most relevant are the first two:
1. An arrangement between a company and one of its directors
2. An arrangement between a company and a person connected to such a director
CA 2006, s252(2)(a)
‘Connected to’ includes members of the director’s family
CA 2006, s253(2)
‘family members’ includes:
i) Spouse, civil partner and parents
ii) Partner with whom the director lives in an enduring family relationship
iii) Children and stepchildren
iv) Partner’s children or stepchildren if they are under 18 and live with the director
CA 2006, s252(2)(b)
Connected to includes a body corporate connected to a director. This encompasses contracts
with other companies where the director is a shareholder (he must hold at least 20% in shares,
as under s254. The 20% threshold accumulates from the director’s shares plus any connected
person who holds shares in the same company, if any).
Regulation over SPTs is a further example from the CA of controlling situations where directors have an actual
or potential conflict of interest with their company, in addition to that imposed under the duty to declare interest
in transactions under s177. Because of the nature of an SPT and the amount of money involved, the shareholders
have veto over whether the company should enter into an SPT.
CA 2006, s190(1)
If a director in his personal capacity, or someone connected to him, buys something from or sells
something to the company, the consent of the shareholders by resolution is necessary if the asset
is of non-cash nature, and is deemed to be substantial.
Requirements
Before a matter constitutes an SPT, there must be:
a) An arrangement/ transaction
b) Between the company and:
i) One of its directors, or
ii) A person connected with such a director, or
iii) One of its holding company directors, or
iv) A person connected with a holding company director
c) Involving the acquisition of a non-cash asset (NCA)
d) That is substantial
If all of the above are met, there will be an SPT and shareholder approval is required.
STEP 1 Identify an Arrangement
This usually will involve a contract between parties, for example to buy land.
STEP 2 Identify the Parties
There are 4 possibilities, as above. The most relevant are the first two:
1. An arrangement between a company and one of its directors
2. An arrangement between a company and a person connected to such a director
CA 2006, s252(2)(a)
‘Connected to’ includes members of the director’s family
CA 2006, s253(2)
‘family members’ includes:
i) Spouse, civil partner and parents
ii) Partner with whom the director lives in an enduring family relationship
iii) Children and stepchildren
iv) Partner’s children or stepchildren if they are under 18 and live with the director
CA 2006, s252(2)(b)
Connected to includes a body corporate connected to a director. This encompasses contracts
with other companies where the director is a shareholder (he must hold at least 20% in shares,
as under s254. The 20% threshold accumulates from the director’s shares plus any connected
person who holds shares in the same company, if any).
