Companies Act 2014 section 115

Civil liability for improper purchase in holding company

Section 115 deals with the personal liability of directors where a subsidiary company that acquired shares in its holding company goes into insolvent winding up shortly after the acquisition.

• Where a subsidiary that acquired shares in its holding company enters winding up within 6 months of the acquisition and is unable to pay its debts, the court may hold the directors personally liable
• A liquidator, creditor, employee or contributory of the company may apply to the court for a declaration of liability against the directors
• Directors may be declared jointly and severally liable to repay the full amount the company paid for the shares
• The court may grant full or partial relief from liability to any director who reasonably believed the share acquisition was in the best interests of the company