#10109 - Substantial Property Transactions - Business Law and Practice

It IS an SPT Template

[SALE/PURCHASE] of [PREMISES/BUSINESS]

The members need to pass an ordinary resolution (“OR”) before the board can complete the [SALE/PURCHASE] contract because the transaction is a substantial property transaction (“SPT”) under s.190(1)(a) Companies Act 2006.This is an SPT because:

• [NAME OF COMPANY] (“The Company”) are involved in an arrangement under s.190 as they are entering into a contract to [PURCHASE/SELL] [LAND AND BUILDINGS/ANOTHER COMPANY]

• The [LAND AND BUILDINGS, (“THE PREMISES)/NAME OF OTHER COMPANY (“ABBREVIATED NAME OF COMPANY”)] fall into the definition of non-cash asset under s.1163 as it is any property or interest in property other than cash

• [THE PREMISES/ABBREV. NAME OF COMPANY] are of substantial value as they are worth [X], which:

  • is more than 100,000 (s.191(2)(b)); or

  • exceeds 5000 but is not more than 100,000 and exceeds 10% of the company’s asset value (I.E. ITS NETS ASSETS) (s.191(2)(a)). It is [X]% of the company’s asset value.

• The [PURCHASER/SELLER] of [THE PREMISES/ABBREV. NAME OF COMPANY] [“NAME OF PURCHASER/SELLER”], is connected to a director of the Company (“NAME OF D”) because [“NAME OF PURCHASER/SELLER”] is (pick an option below)

  • a member of D’s family (s.252(1) and (2)(a) and s.253(2)(a-e)); or

  • a body corporate (s.252(1) and 2(b)) in which a member of D’s family (s.252(1) and (2)(a)and s.253(2)(a-e)) (“NAME OF MEMBER OF FAMILY”) owns at least 20% of voting shares (s.254(2)(b)) [AND/OR] share capital (s.254(2)(a)). (NAME OF MEMBER OF FAMILY”) owns [X]% of the voting shares [AND/OR] share capital ; or

  • a body corporate (s.252(1) and 2(b)) in which D owns at least 20% of voting shares (s.254(2)(b)) [AND/OR] share capital (s.254(2)(a)). D owns [X]% of the voting shares [AND/OR] share capital; or

  • a body corporate (s.252(1) and 2(b)) in which a member of D’s family (s.252(1) and (2)(a) and s.253(2)(a-e)) (“NAME OF MEMBER OF FAMILY”) and D collectively own at least 20% of voting shares (s.254(2)(b)) [AND/OR] share capital (s.254(2)(a)). (NAME OF MEMBER OF FAMILY”) owns [X]% of the voting shares [AND/OR] share capital and D owns [Y]% of the voting shares [AND/OR] share capital therefore collectively they own [X+Y]% of the voting shares [AND/OR] share capital.

• None of the exceptions apply in CA apply.

  • NB if D who is connected is D of Holding Company, members of Holding Company need to pass OR to authorise transaction (s.190(2))

It is NOT an SPT Template

[SALE/PURCHASE] of [PREMISES/BUSINESS]

Prima Face, the members need to pass an ordinary resolution (“OR”) before the board can complete the [SALE/PURCHASE] contract because, Prima Face, the transaction is a substantial property transaction (“SPT”) under s.190(1)(a) Companies Act 2006.

Prima facie, this is an SPT because:

• [NAME OF COMPANY] (“The Company”) are involved in an arrangement under s.190 as they are entering into a contract to [PURCHASE/SELL] [LAND AND BUILDINGS/ANOTHER COMPANY]

• The [LAND AND BUILDINGS, (“THE PREMISES)/NAME OF OTHER COMPANY (“ABBREVIATED NAME OF COMPANY”)] fall into the definition of non-cash asset under s.1163 as it is any property or interest in property other than cash

• [THE PREMISES/ABBREV. NAME OF COMPANY] are of substantial value as they are worth [X], which:

  • is more than 100,000 (s.191(2)(b); or

  • exceeds 5000 but is not more than 100,000 and exceeds 10% of the company’s asset value (I.E. ITS NETS ASSETS) (s.191(2)(a)). It is [X]% of the company’s asset value.

• The [PURCHASER/SELLER] of [THE PREMISES/ABBREV. NAME OF COMPANY] [“NAME OF PURCHASER/SELLER”], is connected to a director of the Company (“NAME OF D”) because [“NAME OF PURCHASER/SELLER”] is (pick an option below)

  • a member of D’s family (s.252(1) and (2)(a) and s.253(2)(a-e)); or

  • a body corporate (s.252(1) and 2(b)) in which a member of D’s family (s.252(1) and (2)(a) and s.253(2)(a-e)) (“NAME OF MEMBER OF FAMILY”) owns at least 20% of voting shares (s.254(2)(b)) [AND/OR] share capital (s.254(2)(a)). (NAME OF MEMBER OF FAMILY”) owns [X]% of the voting shares [AND/OR] share capital ; or

  • a body corporate (s.252(1) and 2(b)) in which D owns at least 20% of voting shares (s.254(2)(b)) [AND/OR] share capital (s.254(2)(a)). D owns [X]% of the voting shares [AND/OR] share capital; or

  • a body corporate (s.252(1) and 2(b)) in which a member of D’s family (s.252(1) and (2)(a) and s.253(2)(a-e)) (“NAME OF MEMBER OF FAMILY”) and D collectively own at least 20% of voting shares (s.254(2)(b)) [AND/OR] share capital (s.254(2)(a)). (NAME OF MEMBER OF FAMILY”) owns [X]% of the voting shares [AND/OR] share capital and D owns [Y]% of the voting shares [AND/OR] share capital therefore collectively they own [X+Y]% of the voting shares [AND/OR] share capital.

• However:

  • The company is wholly owned subsidiary (s.190(4)(b)) ; or

  • The contract is between a company and D in his capacity as a SH (s.192(a)) e.g payment of dividends, buy back of shares; or

  • The contract is between holding and subsidiary company. (s.192(b)(i)); or

  • The contract is between two wholly owned subsidiaries of same holding company (s.192(b)(ii)); or

  • The company is in administration or is being wound up (s.193(1)).

• This is an exception under and therefore the members are not required to pass an OR to authorise the transaction

  • NB if D who is connected is D of Holding Company, Holding Company need to pass OR...