Approvals

As with any transaction, the entry into a deed of access, indemnity and insurance, amendments to the constitution and taking out insurance must be approved by the board of the company. In those circumstances, and particularly in the context of corporate groups, there is a risk that related parties with an interest in the transaction may be accused of improperly influencing the decision-making of directors to the detriment of the interests of members. This issue is particularly prevalent, for example, where there are multiple directors who will be offered protection under the deeds of access, indemnity and insurance, and the decision of each director to approve a transaction in respect of another director may influence the second director to approve a transaction that relates to the first director. Such an accusation is not likely to be made at a time when the protections are needed or being relied upon and it is at that point in time that the approval process is most likely to be scrutinised.

Where a director has a material personal interest in a matter, he or she has a duty to notify the other directors of the interests. In some circumstances, the interested director may be restricted from voting on the matter or attending the directors’ meeting while the matter is being considered. While this issue is relevant to all companies, material personal interests may arise more frequently in the context of corporate groups where there are intra group transactions and/or common directorships.

Additionally, member approval may also be required where some financial benefit is given by a public company, or an entity controlled by a public company to a related party, subject to certain exceptions.

See Approvals.