Letter – Declaration of Director’s Interest in Proposed Transaction

Letter – Declaration of Director’s Interest in Proposed Transaction

CO.CA.DIR.12

This Letter – Declaration of Director’s Interest in Proposed Transaction is a director’s declaration of interest in relation to a specific transaction or arrangement that the company is entering into.

The Companies Act 2006 placed requirements on directors to declare their interest in any transaction or arrangement that is proposed to be entered into by the company (section 177) as well as any existing transaction or arrangement entered into by the company (section 182) although a further declaration in respect of an existing transaction or arrangement need not be made if a declaration was made when the transaction or arrangement was proposed.

The declaration in relation to either an existing or proposed transaction or arrangement can be made in one of three ways:

- at a meeting of the directors, or
- by notice in writing (under section 184), or
- by general notice (under section 185).

A declaration in relation to a proposed transaction or arrangement must be made before the company enters into it, and if a declaration of interest proves to be, or becomes, inaccurate or incomplete, a further declaration must be made.

This template covers the situation under section 184, i.e. notice in writing. For a General Notice of director’s interests, please see below right.

A declaration in relation to an existing transaction or arrangement must be made as soon as is reasonably practicable. Failure to comply with the requirement does not affect the underlying duty to make the declaration. This template will need to be amended to create a declaration of interest in an existing transaction.

In each case, 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 is not required. For this purpose a director is treated as being aware of matters of which he or she ought reasonably to be aware.

A director need not declare an interest in the following circumstances:

- if it cannot reasonably be regarded as likely to give rise to a conflict of interest;
- if 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
- if it concerns terms of his service contract that have been or are to be considered by a meeting of the directors, or by a committee of the directors.

This Letter – Declaration of Director’s Interest in Proposed Transactionis made under section 184 of the Companies Act 2006. The director must send the notice to the other directors. The notice may be sent in hard copy form or in electronic form (if agreed by the other directors). The notice may be sent by hand or by post, or by electronic means (if agreed by the other directors). The declaration will automatically form part of the proceedings at the next board meeting after the declaration is given.

This letter is in open format. Fields should be completed where indicated. Wording in square brackets is optional and can be deleted or retained according to requirements.

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