• Loans, quasi-loans and credit transactions

    • 186. Loans to directors: requirement of members' approval

      (1) A company may not—
      (a) make a loan to a director of the company or of its holding company, or
      (b) give a guarantee or provide security in connection with a loan made by any person to such a director,
      unless the transaction has been approved by a resolution of the members of the company or is conditional on such approval being obtained.
      (2) If the director is a director of the company's holding company, the transaction must also have been approved by a resolution of the members of the holding company.
      (3) A resolution approving a transaction to which this section applies must not be passed unless a memorandum setting out the matters mentioned in subsection (4) is made available to members—
      (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him,
      (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both—
      (i) at the company's registered office for not less than 15 days ending with the date of the meeting, and
      (ii) at the meeting itself.
      (4) The matters to be disclosed are—
      (a) the nature of the transaction,
      (b) the amount of the loan and the purpose for which it is required, and
      (c) the extent of the company's liability under any transaction connected with the loan.
      (5) No approval is required under this section on the part of the members of a body corporate that—
      (a) is not a company registered in the Abu Dhabi Global Market,
      (b) is a wholly-owned subsidiary of another body corporate, or
      (c) is a restricted scope company.

    • 187. Quasi-loans to directors: requirement of members' approval

      (1) This section applies to a company if it is—
      (a) a public company, or
      (b) a company associated with a public company.
      (2) A company to which this section applies may not—
      (a) make a quasi-loan to a director of the company or of its holding company, or
      (b) give a guarantee or provide security in connection with a quasi-loan made by any person to such a director,
      unless the transaction has been approved by a resolution of the members of the company.
      (3) If the director is a director of the company's holding company, the transaction must also have been approved by a resolution of the members of the holding company.
      (4) A resolution approving a transaction to which this section applies must not be passed unless a memorandum setting out the matters mentioned in subsection (5) is made available to members—
      (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him,
      (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both—
      (i) at the company's registered office for not less than 15 days ending with the date of the meeting, and
      (ii) at the meeting itself.
      (5) The matters to be disclosed are—
      (a) the nature of the transaction,
      (b) the amount of the quasi-loan and the purpose for which it is required, and
      (c) the extent of the company's liability under any transaction connected with the quasi-loan.
      (6) No approval is required under this section on the part of the members of a body corporate that—
      (a) is not a company registered in the Abu Dhabi Global Market, or
      (b) is a wholly-owned subsidiary of another body corporate.
      (c) is a restricted scope company

    • 188. Meaning of "quasi-loan" and related expressions

      (1) A "quasi-loan" is a transaction under which one party ("the creditor") agrees to pay, or pays otherwise than in pursuance of an agreement, a sum for another ("the borrower") or agrees to reimburse, or reimburses otherwise than in pursuance of an agreement, expenditure incurred by another party for another ("the borrower")—
      (a) on terms that the borrower (or a person on his behalf) will reimburse the creditor, or
      (b) in circumstances giving rise to a liability on the borrower to reimburse the creditor.
      (2) Any reference to the person to whom a quasi-loan is made is a reference to the borrower.
      (3) The liabilities of the borrower under a quasi-loan include the liabilities of any person who has agreed to reimburse the creditor on behalf of the borrower.

    • 189. Loans or quasi-loans to persons connected with directors: requirement of members' approval

      (1) This section applies to a company if it is—
      (a) a public company, or
      (b) a company associated with a public company.
      (2) A company to which this section applies may not—
      (a) make a loan or quasi-loan to a person connected with a director of the company or of its holding company, or
      (b) give a guarantee or provide security in connection with a loan or quasi-loan made by any person to a person connected with such a director,
      unless the transaction has been approved by a resolution of the members of the company.
      (3) If the connected person is a person connected with a director of the company's holding company, the transaction must also have been approved by a resolution of the members of the holding company.
      (4) A resolution approving a transaction to which this section applies must not be passed unless a memorandum setting out the matters mentioned in subsection (5) is made available to members—
      (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him,
      (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both—
      (i) at the company's registered office for not less than 15 days ending with the date of the meeting, and
      (ii) at the meeting itself.
      (5) The matters to be disclosed are—
      (a) the nature of the transaction,
      (b) the amount of the loan or quasi-loan and the purpose for which it is required, and
      (c) the extent of the company's liability under any transaction connected with the loan or quasi-loan.
      (6) No approval is required under this section on the part of the members of a body corporate that—
      (a) is not a company registered in the Abu Dhabi Global Market, or
      (b) is a wholly-owned subsidiary of another body corporate, or
      (c) is a restricted scope company.

    • 190. Credit transactions: requirement of members' approval

      (1) This section applies to a company if it is—
      (a) a public company, or
      (b) a company associated with a public company.
      (2) A company to which this section applies may not—
      (a) enter into a credit transaction as creditor for the benefit of a director of the company or of its holding company, or a person connected with such a director, or
      (b) give a guarantee or provide security in connection with a credit transaction entered into by any person for the benefit of such a director, or a person connected with such a director,
      unless the transaction (that is, the credit transaction, the giving of the guarantee or the provision of security, as the case may be) has been approved by a resolution of the members of the company.
      (3) If the director or connected person is a director of its holding company or a person connected with such a director, the transaction must also have been approved by a resolution of the members of the holding company.
      (4) A resolution approving a transaction to which this section applies must not be passed unless a memorandum setting out the matters mentioned in subsection (5) is made available to members—
      (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him,
      (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both—
      (i) at the company's registered office for not less than 15 days ending with the date of the meeting, and
      (ii) at the meeting itself.
      (5) The matters to be disclosed are—
      (a) the nature of the transaction,
      (b) the value of the credit transaction and the purpose for which the land, goods or services sold or otherwise disposed of, leased, hired or supplied under the credit transaction are required, and
      (c) the extent of the company's liability under any transaction connected with the credit transaction.
      (6) No approval is required under this section on the part of the members of a body corporate that—
      (a) is not a company registered in the Abu Dhabi Global Market,
      (b) is a wholly-owned subsidiary of another body corporate, or
      (c) is a restricted scope company.

    • 191. Meaning of "credit transaction"

      (1) A "credit transaction" is a transaction under which one party ("the creditor")—
      (a) supplies any goods or sells any land under a hire-purchase agreement or a conditional sale agreement,
      (b) leases or hires any land or goods in return for periodical payments, or
      (c) otherwise disposes of land or supplies goods or services on the understanding that payment (whether in a lump sum or instalments or by way of periodical payments or otherwise) is to be deferred.
      (2) Any reference to the person for whose benefit a credit transaction is entered into is to the person to whom goods, land or services are supplied, sold, leased, hired or otherwise disposed of under the transaction.
      (3) In this section-

      "conditional sale agreement" means an agreement for the sale of goods or land under which the purchase price or part of it is payable by instalments, and the property in the goods or land is to remain in the seller (notwithstanding that the buyer is to be in possession of the goods or land) until such conditions as to the payment of instalments or otherwise as may be specified in the agreement are fulfilled, and

      "services" means anything other than goods or land.

    • 192. Related arrangements: requirement of members' approval

      (1) A company may not—
      (a) take part in an arrangement under which—
      (i) another person enters into a transaction that, if it had been entered into by the company, would have required approval under section 186 (loans to directors), 187 (quasi-loans to directors), 189 (loans or quasi-loans to persons connected with directors) or 190 (credit transactions), and
      (ii) that person, in pursuance of the arrangement, obtains a benefit from the company or a body corporate associated with it, or
      (b) arrange for the assignment to it, or assumption by it, of any rights, obligations or liabilities under a transaction that, if it had been entered into by the company, would have required such approval,
      unless the arrangement in question has been approved by a resolution of the members of the company.
      (2) If the director or connected person for whom the transaction is entered into is a director of its holding company or a person connected with such a director, the arrangement must also have been approved by a resolution of the members of the holding company.
      (3) A resolution approving an arrangement to which this section applies must not be passed unless a memorandum setting out the matters mentioned in subsection (4) is made available to members—
      (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him,
      (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both—
      (i) at the company's registered office for not less than 15 days ending with the date of the meeting, and
      (ii) at the meeting itself.
      (4) The matters to be disclosed are—
      (a) the matters that would have to be disclosed if the company were seeking approval of the transaction to which the arrangement relates,
      (b) the nature of the arrangement, and
      (c) the extent of the company's liability under the arrangement or any transaction connected with it.
      (5) No approval is required under this section on the part of the members of a body corporate that—
      (a) is not a company registered in the Abu Dhabi Global Market, or
      (b) is a wholly-owned subsidiary of another body corporate, or
      (c) is a restricted scope company.
      (6) In determining for the purposes of this section whether a transaction is one that would have required approval under section 186 (loans to directors), 187 (quasi-loans to directors), 189 (loans or quasi-loans to persons connected with directors) or 190 (credit transactions) if it had been entered into by the company, the transaction shall be treated as having been entered into on the date of the arrangement.

    • 193. Exception for expenditure on company business

      (1) Approval is not required under section 186 (loans to directors), 187 (quasi-loans to directors), 189 (loans or quasi-loans to persons connected with directors) or 190 (credit transactions) for anything done by a company—
      (a) to provide a director of the company or of its holding company, or a person connected with any such director, with funds to meet expenditure incurred or to be incurred by him—
      (i) for the purposes of the company, or
      (ii) for the purpose of enabling him properly to perform his duties as an officer of the company, or
      (b) to enable any such person to avoid incurring such expenditure.
      (2) This section does not authorise a company to enter into a transaction if the aggregate of—
      (a) the value of the transaction in question, and
      (b) the value of any other relevant transactions or arrangements,
      exceeds 50,000 US dollars.

    • 194. Exception for expenditure on defending proceedings etc.

      (1) Approval is not required under section 186 (loans to directors), 187 (quasi-loans to directors), 189 (loans or quasi-loans to persons connected with directors) or 190 (credit transactions) for anything done by a company—
      (a) to provide a director of the company or of its holding company with funds to meet expenditure incurred or to be incurred by him—
      (i) in defending any criminal or civil proceedings, or
      (ii) in connection with an application for relief (see subsection (5)), or
      (b) to enable any such director to avoid incurring such expenditure,
      if it is done on the following terms.
      (2) The terms are—
      (a) that the loan is to be repaid, or (as the case may be) any liability of the company incurred under any transaction connected with the thing done is to be discharged, in the event of—
      (i) the director being convicted in the proceedings,
      (ii) judgment being given against him in the proceedings, or
      (iii) the Court refusing to grant him relief on the application, and
      (b) that it is to be so repaid or discharged not later than—
      (i) the date when the conviction becomes final,
      (ii) the date when the judgment becomes final, or
      (iii) the date when the refusal of relief becomes final.
      (3) For this purpose a conviction, judgment or refusal of relief becomes final—
      (a) if not appealed against, at the end of the period for bringing an appeal,
      (b) if appealed against, when the appeal (or any further appeal) is disposed of.
      (4) An appeal is disposed of—
      (a) if it is determined and the period for bringing any further appeal has ended, or
      (b) if it is abandoned or otherwise ceases to have effect.
      (5) The reference in subsection (1)(a)(ii) to an application for relief is to an application for relief under section 601(3) or (4)(liability of others where nominee fails to make payment in respect of shares).

    • 195. Exception for expenditure in connection with regulatory action or investigation

      Approval is not required under section 186 (loans to directors), 187 (quasi-loans to directors), 189 (loans or quasi-loans to persons connected with directors) or 190 (credit transactions) for anything done by a company—

      (a) to provide a director of the company or of its holding company with funds to meet expenditure incurred or to be incurred by him in defending himself—
      (i) in an investigation by a regulatory authority, or
      (ii) against action proposed to be taken by a regulatory authority,
      in connection with any alleged negligence, default, breach of duty or breach of trust by him in relation to the company or an associated company, or
      (b) to enable any such director to avoid incurring such expenditure.

    • 196. Exceptions for minor and business transactions

      (1) Approval is not required under section 186 (loans to directors), 187 (quasi-loans to directors) or 189 (loans or quasi-loans to persons connected with directors) for a company to make a loan or quasi-loan, or to give a guarantee or provide security in connection with a loan or quasi-loan, if the aggregate of—
      (a) the value of the transaction, and
      (b) the value of any other relevant transactions or arrangements,
      does not exceed 10,000 US dollars.
      (2) Approval is not required under section 190 (credit transactions) for a company to enter into a credit transaction, or to give a guarantee or provide security in connection with a credit transaction, if the aggregate of—
      (a) the value of the transaction (that is, of the credit transaction, guarantee or security), and
      (b) the value of any other relevant transactions or arrangements,
      does not exceed 15,000 US dollars.
      (3) Approval is not required under section 190 (credit transactions) for a company to enter into a credit transaction, or to give a guarantee or provide security in connection with a credit transaction, if—
      (a) the transaction is entered into by the company in the ordinary course of the company's business, and
      (b) the value of the transaction is not greater, and the terms on which it is entered into are not more favourable, than it is reasonable to expect the company would have offered to, or in respect of, a person of the same financial standing but unconnected with the company.

    • 197. Exceptions for intra-group transactions

      (1) Approval is not required under section 186 (loans to directors), 187 (quasi-loans to directors) or 189 (loans or quasi-loans to persons connected with directors) for—
      (a) the making of a loan or quasi-loan to an associated body corporate, or
      (b) the giving of a guarantee or provision of security in connection with a loan or quasi-loan made to an associated body corporate.
      (2) Approval is not required under section 190 (credit transactions)—
      (a) to enter into a credit transaction as creditor for the benefit of an associated body corporate, or
      (b) to give a guarantee or provide security in connection with a credit transaction entered into by any person for the benefit of an associated body corporate.

    • 198. Exceptions for money-lending companies

      (1) Approval is not required under section 186 (loans to directors), 187 (quasi-loans to directors) or 189 (loans or quasi-loans to persons connected with directors) for the making of a loan or quasi-loan, or the giving of a guarantee or provision of security in connection with a loan or quasi-loan, by a money-lending company if—
      (a) the transaction (that is, the loan, quasi-loan, guarantee or security) is entered into by the company in the ordinary course of the company's business, and
      (b) the value of the transaction is not greater, and its terms are not more favourable, than it is reasonable to expect the company would have offered to a person of the same financial standing but unconnected with the company.
      (2) A "money-lending company" means a company whose ordinary business includes the making of loans or quasi-loans, or the giving of guarantees or provision of security in connection with loans or quasi-loans.
      (3) The condition specified in subsection (1)(b) does not of itself prevent a company from making a home loan—
      (a) to a director of the company or of its holding company, or
      (b) to an employee of the company,
      if loans of that description are ordinarily made by the company to its employees and the terms of the loan in question are no more favourable than those on which such loans are ordinarily made.
      (4) For the purposes of subsection (3) a "home loan" means a loan—
      (a) for the purpose of facilitating the purchase, for use as the only or main residence of the person to whom the loan is made, of the whole or part of any dwelling-house together with any land to be occupied and enjoyed with it,
      (b) for the purpose of improving a dwelling-house or part of a dwelling-house so used or any land occupied and enjoyed with it, or
      (c) in substitution for any loan made by any person and falling within subsection (4)(a) or (b).

    • 199. Other relevant transactions or arrangements

      (1) This section has effect for determining what are "other relevant transactions or arrangements" for the purposes of any exception to section 186 (loans to directors), 187 (quasi-loans to directors), 189 (loans or quasi-loans to persons connected with directors) or 190 (credit transactions).

      In the following provisions "the relevant exception" means the exception for the purposes of which that falls to be determined.
      (2) Other relevant transactions or arrangements are those previously entered into, or entered into at the same time as the transaction or arrangement in question in relation to which the following conditions are met.
      (3) Where the transaction or arrangement in question is entered into—
      (a) for a director of the company entering into it, or
      (b) for a person connected with such a director,
      the conditions are that the transaction or arrangement was (or is) entered into for that director, or a person connected with him, by virtue of the relevant exception by that company or by any of its subsidiaries.
      (4) Where the transaction or arrangement in question is entered into—
      (a) for a director of the holding company of the company entering into it, or
      (b) for a person connected with such a director,
      the conditions are that the transaction or arrangement was (or is) entered into for that director, or a person connected with him, by virtue of the relevant exception by the holding company or by any of its subsidiaries.
      (5) A transaction or arrangement entered into by a company that at the time it was entered into—
      (a) was a subsidiary of the company entering into the transaction or arrangement in question, or
      (b) was a subsidiary of that company's holding company,
      is not a relevant transaction or arrangement if, at the time the question arises whether the transaction or arrangement in question falls within a relevant exception, it is no longer such a subsidiary.

    • 200. The person for whom a transaction or arrangement is entered into

      For the purposes of sections 186 (loans to directors) to 202 (loans etc.: effect of subsequent affirmation) the person for whom a transaction or arrangement is entered into is—

      (a) in the case of a loan or quasi-loan, the person to whom it is made,
      (b) in the case of a credit transaction, the person to whom goods, land or services are supplied, sold, hired, leased or otherwise disposed of under the transaction,
      (c) in the case of a guarantee or security, the person for whom the transaction is made in connection with which the guarantee or security is entered into,
      (d) in the case of an arrangement within section 192 (related arrangements), the person for whom the transaction is made to which the arrangement relates.

    • 201. Loans etc.: consequences of contravention

      (1) This section applies where a company enters into a transaction or arrangement in contravention of section 186 (loans to directors), 187 (quasi-loans to directors), 189 (loans or quasi-loans to persons connected with directors), 190 (credit transactions) or 192 (related arrangements).
      (2) The transaction or arrangement is voidable at the instance of the company, unless—
      (a) restitution of any money or other asset that was the subject matter of the transaction or arrangement is no longer possible,
      (b) the company has been indemnified for any loss or damage resulting from the transaction or arrangement, or
      (c) rights acquired in good faith, for value and without actual notice of the contravention by a person who is not a party to the transaction or arrangement would be affected by the avoidance.
      (3) Whether or not the transaction or arrangement has been avoided, each of the persons specified in subsection (4) is liable—
      (a) to account to the company for any gain that he has made directly or indirectly by the transaction or arrangement, and
      (b) (jointly and severally with any other person so liable under this section) to indemnify the company for any loss or damage resulting from the transaction or arrangement.
      (4) The persons so liable are—
      (a) any director of the company or of its holding company with whom the company entered into the transaction or arrangement in contravention of section 186 (loans to directors), 187 (quasi-loans to directors), 190 (credit transactions) or 192 (related arrangements),
      (b) any person with whom the company entered into the transaction or arrangement in contravention of any of those sections who is connected with a director of the company or of its holding company,
      (c) the director of the company or of its holding company with whom any such person is connected, and
      (d) any other director of the company who authorised the transaction or arrangement.
      (5) Subsections (3) and (4) are subject to the following two subsections.
      (6) In the case of a transaction or arrangement entered into by a company in contravention of section 189 (loans or quasi-loans to persons connected with directors), 190 (credit transactions) or 192 (related arrangements) with a person connected with a director of the company or of its holding company, that director is not liable by virtue of subsection (4)(c) if he shows that he took all reasonable steps to secure the company's compliance with the section concerned.
      (7) In any case—
      (a) a person so connected is not liable by virtue of subsection (4)(b), and
      (b) a director is not liable by virtue of subsection (4)(d),
      if he shows that, at the time the transaction or arrangement was entered into, he did not know the relevant circumstances constituting the contravention.
      (8) Nothing in this section shall be read as excluding the operation of any rule of law applicable in the Abu Dhabi Global Market by virtue of which the transaction or arrangement may be called in question or any liability to the company may arise.

    • 202. Loans etc.: effect of subsequent affirmation

      Where a transaction or arrangement is entered into by a company in contravention of section 186 (loans to directors), 187 (quasi-loans to directors), 189 (loans or quasi-loans to persons connected with directors), 190 (credit transactions) or 192 (related arrangements) but, within a reasonable period, it is affirmed—

      (a) in the case of a contravention of the requirement for a resolution of the members of the company, by a resolution of the members of the company, and
      (b) in the case of a contravention of the requirement for a resolution of the members of the company's holding company, by a resolution of the members of the holding company,

      the transaction or arrangement may no longer be avoided under section 201 (loans etc.: consequences of contravention).