MENU

Section 36 of The Companies Act No. 17 of 2015: Constitutional limitations: transactions involving directors or their associates

    

(1) This section applies to a transaction if or to the extent that its validity
depends on section 34.
(2) Nothing in this section precludes the operation of any other written law under
which the transaction can be questioned or any liability to the company may arise.
(3) If—
(a) a company enters into such a transaction; and
(b) the parties to the transaction include —
(i) a director of the company or of its holding company; or
(ii) a person connected with any such director, the transaction is
voidable at the instance of the company.
(4) Whether or not it is avoided, any such party to the transaction as is referred
to in subsection (3)(b)(i) or (ii), and any director of the company who authorised
the transaction, is liable—
(a) to account to the company for any gain the director has made from
the transaction (whether directly or indirectly); and
(b) to indemnify the company for any loss or damage resulting from the
transaction.
(5) The transaction ceases to be voidable if—
(a) restitution of any money or other asset which was the subject matter
of the transaction is no longer possible;
(b) the company is indemnified for any loss or damage resulting from the
transaction;
(c) rights acquired in good faith for value and without actual notice of the
directors' exceeding their powers by a person who is not party to the
transaction would be affected by the avoidance; or
(d) the transaction is affirmed by the company.
(6) A person other than a director of the company is not liable under subsection
(4) if the person shows that, at the time the transaction was entered into, the person
did not know that the directors were exceeding their powers.
(7) Nothing in the preceding provisions of this section affects the rights of any
party to the transaction not within subsection (3)(b)(i) or (ii).
(8) But the Court may, on the application of the company or any such party,
make an order affirming, severing or setting aside the transaction on such terms
as appear to the Court to be just.
(9) In this section—
(a) "transaction" includes any act; and
(b) the reference to a person connected with a director has the same
meaning as in Part IX.

« Previous:   Section 35 - Company contracts          Next: »   Section 37 - Execution of documents

Disclaimer: This document is not to be taken as legal advise.

Enhance Your Research with Bookmarks and Annotations

Here's how you can use these features:

  • To bookmark this page, click the "Bookmark this Page" button below the document title.
  • To add an annotation, highlight text in the document and select "Add Annotation" from the toolbar that appears.
  • These features are great for organizing your research and keeping track of key information.
  • You can view and manage your bookmarks and annotations on your Bookmarks and Annotations page.

Cited By:

More Sections