Companies Act 2014 section 241

Reduction in amount of company's relevant assets

Section 241 deals with what must happen when a fall in the value of a company's relevant assets causes previously compliant arrangements with directors or connected persons to breach the 10 per cent threshold.

• Where the total amount outstanding under arrangements permitted by section 240 comes to exceed 10 per cent of the company's relevant assets — typically because the asset values have fallen — the company, its directors and the beneficiaries of those arrangements must take corrective action.
• Corrective action means amending the terms of the arrangements so that the total outstanding amount falls back within the 10 per cent limit, and this must be done within two months of the directors becoming aware (or reasonably ought to have become aware) of the breach.
• Arrangements entered into under the Summary Approval Procedure are excluded from this requirement.
• If the arrangements are not amended within the two-month period, the company may treat them as voidable, subject to the same restrictions on avoidance set out in section 246.

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