Constitutional limitations: transactions with directors or their associates
25C.—(1)  This section shall apply to a transaction if or to the extent that its validity depends on section 25B.
(2)  Nothing in this section shall be construed as excluding the operation of any other written law or rule of law by virtue of which the transaction may be called in question or any liability to the company may arise.
(3)  Where —
(a)a company enters into such a transaction; and
(b)the parties to the transaction include —
(i)a director of the company or of its holding company; or
(ii)a person connected with any such director,
the transaction is voidable at the instance of the company.
(4)  Whether or not it is avoided, any such party to the transaction as is mentioned in subsection (3)(b)(i) or (ii), and any director of the company who authorised the transaction, is liable —
(a)to account to the company for any gain he has made directly or indirectly by the transaction; and
(b)to indemnify the company for any loss or damage resulting from the transaction.
(5)  The transaction ceases to be voidable if —
(a)restitution of any money or other asset which was the subject-matter of the transaction is no longer possible;
(b)the company is indemnified for any loss or damage resulting from the transaction;
(c)rights acquired bona fide for value and without actual notice of the directors exceeding their powers by a person who is not party to the transaction would be affected by the avoidance; or
(d)the transaction is affirmed by the company.
(6)  A person other than a director of the company is not liable under subsection (4) if he shows that at the time the transaction was entered into he did not know that the directors were exceeding their powers.
(7)  Nothing in subsections (1) to (6) shall affect the rights of any party to the transaction not within subsection (3)(b)(i) or (ii); but the court may, on the application of the company or any such party, make an order affirming, severing or setting aside the transaction on such terms as appear to the court to be just.
(8)  In this section, “transaction” includes any act.
[Act 36 of 2014 wef 03/01/2016]