COMPANIES ACT - 1963 (ACT 179)

    Section - 301 - Prohibition of Loans by Public Companies to Directors

    (1) It shall not be lawful for any public company to make a loan to any person who is its director or a director of any associated company, or to enter into any guarantee or provide any security in connection with a loan made to such a person by any other person:

    Provided that nothing in this section shall apply,

    (a) to the making of a loan to an associated company or the entering into any guarantee or the proving of any security in connection with a loan made to an associated company by any other person; or

    (b) subject to subsection (2) of this section, in the case of a company whose ordinary business includes the lending of money or the giving of guarantees in connection with loans made by other persons, to anything done by the company in the ordinary course of that business.

    (2) Proviso (b) to subsection (1) of this section shall not authorise the making of any loans or the entering into any guarantee or the providing of any security, unless the total amount lent, guaranteed, and secured in respect of loans to such persons as aforesaid does not exceed one per centum of the net assets of the company; and for the purpose of this subsection the expression "net assets" means the assets less the liabilities of the company as shown in the last audited balance sheet of the company.

    (3) If any company shall make default in complying with the provisions of this section the company and every officer of the company who is in default shall be liable to a fine not exceeding one hundred pounds and the directors authorising the making of the loan or the entering into the guarantee or the providing of the security shall be jointly and severally liable to indemnify the company against any loss arising therefrom.