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Section 168 of The Companies Act No. 17 of 2015: Related arrangements: requirement of members’ approval

    

(1) A company may not—
(a) participate in an arrangement under which—
(i) another person enters into a transaction that, if it had been entered into by the company, would have required approval under this Act; and
(ii) that person, in accordance with the arrangement, obtains a benefit from the company or a body corporate associated with it; and
(b) arrange for the assignment to it, or assumption by it, of any rights, obligations or liabilities under a transaction that, if it had been entered into by the company, would have required such an approval, unless the arrangement has been approved by a resolution of the members of the company.
(2) If the director or connected person for whom the transaction is entered into is a director of its holding company or a person connected with such a director, the arrangement also needs to have been approved by a resolution of the members of the holding company.
(3) A resolution approving an arrangement to which this section applies can be passed only if a memorandum setting out the matters referred to in subsection (4) 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.
(4) The matters to be disclosed are—
(a) the matters that would have to be disclosed if the company were seeking approval of the transaction to which the arrangement relates; (b) the nature of the arrangement; and
the extent of the company's liability under the arrangement or any transaction connected with it.
(5) 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.
(6) In determining for the purposes of this section whether a transaction is one that would have required approval under section 164, 165, 166 or 167 if it had been entered into by the company, the transaction is taken to have been entered into on the date of the arrangement.

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

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