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SOLR_PROP

Companies Act, 1990

Prohibition of loans, etc. to directors and connected persons.

31.(1) Except as provided by sections 32 to 37 , a company shall not—

(a) make a loan or a quasi-loan to a director of the company or of its holding company or to a person connected with such a director;

(b) enter into a credit transaction as creditor for such a director or a person so connected;

(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.

(2) A company 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 company, would have contravened subsection (1); but for the purposes of this Part the transaction shall be treated as having been entered into on the date of the arrangement.

(3) A company shall not take part in any arrangement whereby—

(a) another person enters into a transaction which, if it had been entered into by the company, would have contravened subsection (1) or (2); and

(b) that other person, in pursuance of the arrangement, has obtained or is to obtain any benefit from the company or its holding company or a subsidiary of the company or its holding company.