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Section 226E: Payments made without approval: civil consequences

Companies Act 2006 · 2006 c. 46View on legislation.gov.uk

Part 10: A company's directors — CHAPTER 4A: Directors of quoted companies ...: special provision

An obligation (however arising) to make a payment which would be in contravention of section 226B or 226C has no effect.

If a payment is made in contravention of section 226B or 226C—

it is held by the recipient on trust for the company or other person making the payment, and
in the case of a payment by a company, any director who authorised the payment is jointly and severally liable to indemnify the company that made the payment for any loss resulting from it.

If a payment for loss of office is made in contravention of section 226C to a director of a quoted company ... in connection with the transfer of the whole or any part of the undertaking or property of the company or a subsidiary of the company—

subsection (2) does not apply, and
the payment is held by the recipient on trust for the company whose undertaking or property is or is proposed to be transferred.

If a payment for loss of office is made in contravention of section 226C to a director of a quoted company ... in connection with a transfer of shares in the company, or in a subsidiary of the company, resulting from a takeover bid—

subsection (2) does not apply,
the payment is held by the recipient on trust for persons who have sold their shares as a result of the offer made, and
the expenses incurred by the recipient in distributing that sum amongst those persons shall be borne by the recipient and not retained out of that sum.

If in proceedings against a director for the enforcement of a liability under subsection (2)(b)—

the director shows that he or she has acted honestly and reasonably, and
the court considers that, having regard to all the circumstances of the case, the director ought to be relieved of liability,

the court may relieve the director, either wholly or in part, from liability on such terms as the court thinks fit.

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This legislation text comes from legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. These source and reuse terms cover the legislation text, not Remedy's commentary.

Reuse reviewed 21 August 2026 under Open Government Licence v3.0.