Section 166 of The Companies Act No. 17 of 2015: Loans or quasi-loans to persons connected with directors: requirement of members’ approval
(1) This section applies to a company that is—
(a) a public company; or
(b) a company associated with a public company.
(2) A company to which this section applies may not—
(a) make a loan or quasi-loan to a person connected with a director of the company or of its holding company; or
(b) give a guarantee or provide security in connection with a loan or quasi-loan made by any person to a person connected with such a director, unless the transaction has been approved by a resolution of the members of the company.
(3) If the connected person is a person connected with a director of the company's holding company, the transaction also needs to have been approved by a resolution of the members of the holding company.
(4) A resolution approving a transaction to which this section applies can be passed only if a memorandum setting out the matters referred to in subsection (5) is made available to members—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to the member; and
(b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both—
(i) at the company's registered office for not less than fourteen days ending with the day before the date of the meeting; and (ii) at the meeting itself.
(5) The matters to be disclosed are—
the nature of the transaction;
(b) the amount of the loan or quasi-loan and the purpose for which it is required; and
(c) the extent of the company's liability under any transaction connected with the loan or quasi-loan.
(6) An approval is not required to be obtained under this section from themembers of a body corporate that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate.
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