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Duty of director to disclose to company payments to be made to him in connection with transfer of shares in a company.
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188.— (1) Where, in connection with the transfer to any persons of all or any of the shares in a company being a transfer resulting from—
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(a) an offer made to the general body of shareholders; or
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(b) an offer made by or on behalf of some other body corporate, with a view to the company becoming its subsidiary or a subsidiary of its holding company; or
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(c) an offer made by or on behalf of an individual with a view to his obtaining the right to exercise or control the exercise of not less than one-third of the voting power at any general meeting of the company; or
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(d) any other offer which is conditional on acceptance to a given extent;
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a payment is to be made to a director of the company by way of compensation for loss of office, or as a consideration for or in connection with his retirement from office, it shall be the duty of that director to take all reasonable steps to secure that particulars of the proposed payment (including the amount thereof) shall be included in or sent with any notice of the offer made for their shares which is given to any shareholders.
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(2) If—
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(a) any such director fails to take reasonable steps as aforesaid; or
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(b) any person who has been properly required by any such director to include the said particulars in or send them with any such notice as aforesaid fails so to do,
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he shall be liable to a fine not exceeding £25.
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(3) Unless—
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(a) the requirements of subsection (1) are complied with in relation to any such payment as is therein mentioned; and
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(b) the making of the proposed payment is, before the transfer of any shares in pursuance of the offer, approved by a meeting summoned for the purpose of the holders of the shares to which the offer relates and of other holders of shares of the same class as any of the said shares,
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any sum received by the director on account of the payment shall be deemed to have been received by him in trust for any persons who have sold their shares as a result of the offer made, and the expenses incurred by him in distributing that sum amongst those persons shall be borne by him and not retained out of that sum.
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(4) Where the shareholders referred to in paragraph (b) of subsection (3) are not all the members of the company and no provision is made by the articles for summoning or regulating such a meeting as is mentioned in that paragraph, the provisions of this Act and of the company's articles relating to general meetings of the company shall, for that purpose, apply to the meeting either without modification or with such modifications as the Minister on the application of any person concerned may direct for the purpose of adapting them to the circumstances of the meeting.
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(5) If at a meeting summoned for the purpose of approving any payment as required by paragraph (b) of subsection (3), a quorum is not present and, after the meeting has been adjourned to a later date, a quorum is again not present, the payment shall be deemed, for the purposes of that subsection, to have been approved.
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