UK: England and Wales: substantial property transactions and shareholder approval

Judgment was given last week in Granada Group Ltd v The Law Debenture Pension Trust Corporation Plc [2015] EWHC 1499 (Ch). At issue was whether certain arrangements made by Granada in August 2000, to secure the payment of supplementary retirement and death benefits to several of its executive directors, were voidable under section 320 ("Substantial property transactions involving directors, etc") of the Companies Act 1985 (now section 190 of the Companies Act 2006) because the prior approval of the shareholders was not obtained.

The trial judge, Mrs Justice Andrews, held that the arrangements were not voidable under section 320, observing that "[it] seems to me ... that s.320(1)(a) was not intended by Parliament to apply to the rights or interests of the director himself, whatever they may be, when the non-cash asset is held in trust for him by someone other than the company itself, save possibly where the trust arrangement is a "bare trust" or the so-called trustee is really a nominee" (para. [47]).