(1)Where a director of a company is in any way, directly or indirectly, interested in a transaction or arrangement that has been entered into by the company, he must declare the nature and extent of the interest to the other directors in accordance with this section.
This section does not apply if or to the extent that the interest has been declared under section 177 (duty to declare interest in proposed transaction or arrangement).
(2)The declaration must be made—
(a)at a meeting of the directors, or
(b)by notice in writing (see section 184), or
(c)by general notice (see section 185).
(3)If a declaration of interest under this section proves to be, or becomes, inaccurate or incomplete, a further declaration must be made.
(4)Any declaration required by this section must be made as soon as is reasonably practicable.
Failure to comply with this requirement does not affect the underlying duty to make the declaration.
(5)This section does not require a declaration of an interest of which the director is not aware or where the director is not aware of the transaction or arrangement in question.
For this purpose a director is treated as being aware of matters of which he ought reasonably to be aware.
(6)A director need not declare an interest under this section—
(a)if it cannot reasonably be regarded as likely to give rise to a conflict of interest;
(b)if, or to the extent that, the other directors are already aware of it (and for this purpose the other directors are treated as aware of anything of which they ought reasonably to be aware); or
(c)if, or to the extent that, it concerns terms of his service contract that have been or are to be considered—
(i)by a meeting of the directors, or
(ii)by a committee of the directors appointed for the purpose under the company's constitution.
360.This section requires a director to declare the nature and extent of any direct or indirect interest that he has in any transaction or arrangement entered into by the company. It replaces the provision made by section 317 of the 1985 Act.
361.This chapter differs from the provisions of that section in a number of important respects. The main points are summarised below.
362.Directors are required to declare any interest, direct or indirect, that they have in an existing transaction or arrangement entered into by the company. This section only applies to transactions or arrangements already entered into by the company. Section 177 (duty to declare interests) applies in the case of proposed transactions or arrangements with the company.
363.The director does not need to be a party to the transaction with the company in order for a declaration to be required under this section. For example, where the director’s spouse enters into a transaction with the company that may (but need not necessarily) give rise to an indirect interest on the part of the director in that transaction.
364.The declaration must be of the nature and extent of the director’s direct or indirect interest.
365.If the director has declared his interest in accordance with section 177 at the time the transaction was proposed, and before it was entered into by the company, the director does not need to repeat that declaration once the transaction becomes an existing transaction to which this section applies ( subsection ( 1) ).
366.Furthermore, a director need not declare any interest:
that cannot reasonably be regarded as likely to give rise to a conflict of interest;
that the other directors already know about, or ought reasonably to know about; or
that concerns the terms of his service contract, considered (or to be considered) by a meeting of directors or by the relevant committee of directors.
367.A director is regarded as failing to make the declarations required by this section if he fails to declare something that he ought reasonably to have known. But the director is not otherwise expected by this section to declare things he does not know ( subsection ( 5) ).
368.The declaration should be made as soon as is reasonably practicable. But even if the declaration is not made as soon as it should have been, it must still be made ( subsection ( 4) ). If after a declaration has been made the director’s interest in the transaction or arrangement changes, or the director realises that his interests were not as originally declared, the director must make another declaration of interest, correcting or updating the earlier one ( subsection ( 3) ).
369.The declaration of interest must be made to the other directors using one of the following three methods:-
at a meeting of the directors; or
by notice in writing (in accordance with the requirements of section 184); or
by general notice (in accordance with the requirements of section 185).