Companies Act 2014 section 250

Anti-avoidance provision — section 249

Section 250 prevents companies from circumventing the shareholder approval requirements in section 249 for long-term directors' employment contracts by entering into successive or rolling agreements.

• Where a director has an employment agreement that cannot be terminated by the company (or only in specified circumstances), and the company enters into a new agreement more than six months before the original one expires, the unexpired portion of the original agreement is added to the new agreement's duration for the purposes of the section 249 approval test.
• This prevents companies from avoiding the three-year threshold in section 249 by replacing a long contract with a new one before the old one runs out, effectively resetting the clock.
• If this anti-avoidance rule applies and no shareholder approval was obtained, both the new agreement and the original agreement are deemed to include a term allowing the company to terminate them at any time by giving reasonable notice.
• The terms "employment" and "group" carry the same meanings as defined in section 249, so the rule covers directors employed anywhere within a group of companies.