Companies Act 2014 section 245

Business transactions

Section 245 provides an exemption from the general prohibition on loans and similar transactions to directors, where the transaction is carried out in the ordinary course of the company's business and on normal commercial terms.

• The general prohibition on loans, quasi-loans, credit transactions, guarantees and security to directors does not apply where the transaction meets two conditions.
• The first condition is that the company enters into the transaction in the ordinary course of its business.
• The second condition is that the value and terms of the transaction are no more favourable than what the company would ordinarily offer to an unconnected person of equivalent financial standing.
• This exemption ensures that companies whose regular business includes lending or credit can deal with directors on the same basis as they deal with the general public.