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Company Secretarial

Golden Share Procedure

Enabling Director Loans Using the Golden Share Procedure

Section 239 of Companies Act 2014 prohibits a company from making a loan, quasi loan or guarantee to a director of the company or to a person connected with such a director, or indeed a connected company. However, there are several exceptions that can be availed of under company law, and, of these, the ‘group exception’ is the most common. In turn, a golden share is one of the simpler ways to create a group.

By creating a group structure, the golden share procedure avoids the prohibition on loans, with the added benefit of director(s) not having to give up voting or equity rights. With the onset of audit exemption for small groups, this option can be particularly attractive.

A violation of Section 239 is a reportable, indictable offence. Therefore, it is important for clients to comply with company law regarding directors’ loans

For more information and to discuss your client’s needs, email us or call us today on 053-9100000. We look forward to working with your practice.

How We Can Help

OmniPro can advise on whether the golden share is the best option for a company in a given situation or whether another option may be better.

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Moreover, with our detailed understanding of company law, we can ensure that the process is correctly executed. In particular, it is important that the rights attached to the golden share are correctly prepared to ensure the holder has the right to control the board.

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With OmniPro’s input into planning and implementation, you can be confident that your client’s loan complies with company law, without any unintended negative consequences for the business.

The Golden Share Process - In Detail

  • To put a golden share in place, the company issuing the golden share must pass special resolutions to set up the new share class and to amend its constitution, inserting the new share class and the rights attached to the golden share.
  • The relevant company should apply to subscribe for a golden share in the company the loan is provided. That Company would then create the share class and allot it to the subscriber subject to authority to allot the amendments to the constitution and pre-emption rights.
  • The necessary resolutions should be passed and filed at the CRO along with the relevant statutory forms, the share certificate issued and the register of members written up.

For more information and to discuss your client’s needs, email us or call us today on 053-9100000. We look forward to working with your practice.