This section applies where—
a limited company having only one member enters into a contract with the sole member,
the sole member is also a director of the company, and
the contract is not entered into in the ordinary course of the company's business.
The company must, unless the contract is in writing, ensure that the terms of the contract are either—
set out in a written memorandum, or
recorded in the minutes of the first meeting of the directors of the company following the making of the contract.
If a company fails to comply with this section an offence is committed by every officer of the company who is in default.
A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
For the purposes of this section a shadow director is treated as a director.
Failure to comply with this section in relation to a contract does not affect the validity of the contract.
Nothing in this section shall be read as excluding the operation of any other enactment or rule of law applying to contracts between a company and a director of the company.