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Prohibition of loans etc. to directors and connected persons
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75. (1) An ICAV shall not—
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(a) make a loan or a quasi-loan to a director of the ICAV or its holding company or to a person connected with such a director,
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(b) enter into a credit transaction as creditor for such a director or a person so connected, or
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(c) enter into a guarantee or provide any security in connection with a loan, quasi- loan or credit transaction made by any other person for such a director or a person so connected.
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(2) An ICAV shall not arrange for the assignment to it or the assumption by it of any rights, obligations or liabilities under a transaction which, if it had been entered into by the ICAV, would have contravened subsection (1); but for the purposes of this Act the transaction shall be treated as having been entered into on the date of the arrangement.
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(3) An ICAV shall not take part in any arrangement whereby—
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(a) another person enters into a transaction which, if it had been entered into by the ICAV, would have contravened subsection (1) or (2), and
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(b) that other person, in pursuance of the arrangement, has obtained or is to obtain any benefit from the ICAV.
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(4) Where an ICAV contravenes subsection (1), (2) or (3), the ICAV and any officer of it who is in default commits a category 2 offence.
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(5) Where an ICAV enters into a transaction or arrangement in contravention of subsection (1) or (2) the transaction or arrangement shall be voidable at the instance of the ICAV unless—
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(a) restitution of any money or any other asset which is the subject matter of the arrangement or transaction is no longer possible, or the ICAV has been indemnified in pursuance of subsection (6)(b) for the loss or damage suffered by it, or
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(b) any rights acquired bona fide for value and without actual notice of the contravention by any person, other than the person for whom the transaction or arrangement was made, would be affected by its avoidance.
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(6) Without prejudice to any liability imposed otherwise than by this subsection but subject to subsection (7), where an arrangement or transaction is made by an ICAV for a director of the ICAV or person connected with such a director in contravention of subsection (1) or (2), that director and the person so connected and any other director of the ICAV who authorised the transaction or arrangement shall (whether or not it has been avoided in pursuance of subsection (5)) be liable—
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(a) to account to the ICAV for any gain which he or she has made directly or indirectly by the arrangement or transaction, and
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(b) (jointly and severally with any other person liable under this subsection) to indemnify the ICAV for any loss or damage resulting from the arrangement or transaction.
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(7) Where an arrangement or transaction is entered into by an ICAV and a person connected with a director of the ICAV in contravention of subsection (1) or (2) that director shall not be liable under subsection (6) if the person shows that he or she took all reasonable steps to secure the ICAV’s compliance with that subsection and, in any case, a person so connected and any such other director as is mentioned in subsection (6) shall not be so liable if he or she shows that, at the time the arrangement or transaction was entered into, he or she did not know the relevant circumstances constituting the contravention.
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