Companies Act 2014 section 1038

Enforceability of undertakings made in contravention of certain provisions of Chapter

Section 1038 deals with whether undertakings given in connection with payment for shares in a PLC remain enforceable even where there has been a breach of certain rules governing share capital.

• Undertakings to do work, perform services, or do any other thing given in connection with payment for PLC shares remain enforceable if they would have been enforceable apart from these provisions
• A breach of the rules on share subscription, non-cash consideration, or the requirement for expert reports does not invalidate such undertakings
• The person who received the shares faces a double liability: they must both repay amounts treated as paid up on the shares and honour their contractual obligations
• This provision acts as a deterrent against entering into prohibited share allotment agreements, as parties cannot escape their contractual commitments by pointing to the contravention