Are you Connected?

In the Corporate Team’s recent blog, “Directors: know your (substantial property) limits!“, we looked at the rules surrounding substantial property transactions between a company and its directors. The Companies Act 2006 places restrictions on such transactions, but as highlighted in our recent blog, “Directors: know your (substantial property) limits!“,this also extends to transactions made between a company and persons ‘connected’ with its directors.  But what exactly is a connected person? Well…

A person is connected with a director if that person is:

• A member of the director’s family (so this includes their spouse or civil partner or any other person with whom the director lives as a partner in an enduring family relationship; their children or step children; their spouse’s or civil partner’s children or step children who live with the director and are under the age of 18; and their parents)
• A body corporate in which the director, and any person connected with him, together hold at least 20% of the company’s share capital or are entitled to exercise or control more than 20% of the voting power at any general meeting of the body corporate;
• A person acting in his capacity as a trustee of a trust of which the director or any person connected to him is a beneficiary or the terms of the trust confer a power on the trustees exercisable for the benefit of the director and any person connected to him;
• A person acting in his capacity of a partner of the director or a person connected to the director as set out above; and
• A firm that is a legal person under the law in which the director is a partner or there is partner who is connected to the director as set out above.