Substantial property transaction
Company law

The purchase of an asset from a director of the company or a person connected to a director - for the requisite value of £100,000 or 10% net value of the assets of the company - will be considered a substantial property transaction under s 320 Companies Act 1985. Approval by ordinary resolution of the purchase by shareholders of the company should be sought in a general meeting.

The board should resolve to call an extraordinary general meeting to obtain this approval from shareholders for the purchase to take place.

If the asset does not meet the requisite value requirements, approval of the members would not be required under s320 of the Act. The board would simply need to resolve to purchase the asset from the director.