Companies Act 2014 section 253

Duty of director to disclose to company payments to be made to him or her in connection with transfer of shares in company

Section 253 requires a director to disclose details of any compensation or retirement payment they are due to receive in connection with a transfer of shares in the company, and sets out the consequences of failing to do so.

• Where a director is to receive a payment for loss of office or retirement in connection with certain share transfers (such as a general offer to shareholders, a takeover bid, or an offer to gain significant voting control), the director must ensure full details of that payment are disclosed to shareholders alongside the offer notice.
• Failure by the director to take reasonable steps to disclose such payment details, or failure by a person properly asked by the director to include those details in the offer notice, is a category 3 offence.
• Unless the payment details have been properly disclosed and the payment has been approved at a meeting of the relevant shareholders before any shares are transferred, the director holds any money received on trust for the shareholders who sold their shares, and must personally bear the cost of distributing those funds.
• If two consecutive meetings called to approve the payment fail to achieve a quorum, the payment is deemed to have been approved.

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