103Financial accommodation to directors and associates

103 Financial accommodation to directors and associates

103 Financial accommodation to directors and associates

(1) In this section—

associate of a director means—

(a) the director’s spouse or de facto partner, or

(b) a person when acting in the capacity of trustee of a trust under which—

(i) the director or director’s spouse or de facto partner has a beneficial interest, or

(ii) a body corporate mentioned in paragraph (c) has a beneficial interest, or

(c) a body corporate if—

(i) the director or director’s spouse or de facto partner has a material interest in shares in the body corporate, and

(ii) the nominal value of the shares is not less than 10% of the nominal value of the issued share capital of the body corporate.

(2) For the purposes of this section, a person has a material interest in a share in a body corporate if—

(a) the person has power to withdraw the share capital subscribed for the share or to exercise control over the withdrawal of that share capital, or

(b) the person has power to dispose of or to exercise control over the disposal of the share, or

(c) the person has power to exercise or to control the exercise of any right to vote conferred on the holder of the share.

(3) A society must not provide financial accommodation to a director, or to a person the society knows or should reasonably know is an associate of a director, unless—

(a) the accommodation is—

(i) approved under subsection (4), or

(ii) given under a scheme approved under subsection (4), or

(iii) provided on terms no more favourable to the director or associate than the terms on which it is reasonable to expect the society would give if dealing with the director or associate at arm’s length in the same circumstances, and

(b) the directors have approved the accommodation, at a meeting of the board at which a quorum was present, by a majority of at least two-thirds of the directors present and voting on the matter.