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).