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Section 167 of The Companies Act No. 17 of 2015: Credit transactions: 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) enter into a credit transaction as creditor for the benefit of a director of the company or of its holding company; and a person connected with such a director; or
(b) a transaction involving the giving of a guarantee or the provision of security in connection with a credit transaction entered into by a person for the benefit of such a director, or 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 director or connected person is a director of its holding company or a person connected with such a director, 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 him;
(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—(a) the nature of the transaction;
(b) the value of the credit transaction and the purpose for which the land, goods or services sold or otherwise disposed of, leased, hired or supplied under the credit transaction are required; and
(c) the extent of the company's liability under any transaction connected with the credit transaction.
(6) An approval is not required to be obtained under this section from themembers of a body corporate that—
is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate.

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

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