Companies Act 1967 - Singapore Statutes Online

Loans and quasi‑loans to directors, credit transactions and related arrangements

162.—(1) For the purposes of this section, a company makes a restricted transaction if it —

(a)

makes a loan or quasi‑loan to a director —

(i)	of the company; or
(ii)	of a company which by virtue of section 6 is deemed to be related to that company,

(called in this section a relevant director);

(b)

enters into any guarantee or provides any security in connection with a loan or quasi‑loan made to a relevant director by any other person;

(c)

enters into a credit transaction as creditor for the benefit of a relevant director;

(d)

enters into any guarantee or provides any security in connection with a credit transaction entered into by any person for the benefit of a relevant director;

(e)

takes part in an arrangement under which —

(i)	another person enters into a transaction that, if it had been entered into by the company, would have been a restricted transaction under paragraph (a), (b), (c), (d) or (f); and
(ii)	that person, pursuant to the arrangement, obtains a benefit from the company or a company which by virtue of section 6 is deemed to be related to that company; or

(f)

arranges the assignment to the company, or assumption by the company, of any rights, obligations or liabilities under a transaction that, if it had been entered into by the company, would have been a restricted transaction under paragraphs (a) to (e).

[36/2014]

(2) Subject to subsections (3) and (4) and sections 163A and 163B, a company (other than an exempt private company) must not make a restricted transaction.

[36/2014]

(3) Subject to subsection (4), nothing in this section applies to any transaction which would otherwise be a restricted transaction that is —

(a)	made to or for the benefit of a relevant director to meet expenditure incurred or to be incurred by him or her for the purposes of the company or for the purpose of enabling him or her to properly perform his or her duties as an officer of the company;
(b)	made to or for the benefit of a relevant director who is engaged in the full‑time employment of the company or of a corporation that is deemed to be related to the company, as the case may be, for the purpose of purchasing or otherwise acquiring a home occupied or to be occupied by the director, except that not more than one such restricted transaction may be outstanding at any time;
(c)	made to or for the benefit of a relevant director who is engaged in the full‑time employment of the company or of a corporation that is deemed to be related to that company (as the case may be) where the company has at a general meeting approved of a scheme for the making of such transaction to or for the benefit of employees of the company and the restricted transaction is in accordance with that scheme; or
(d)	made to or for the benefit of a relevant director in the ordinary course of business of a company whose ordinary business includes the lending of money or the giving of guarantees in connection with loans, quasi‑loans or credit transactions made or entered into by other persons if the activities of that company are regulated by any written law relating to banking, finance companies or insurance or are subject to supervision by the Monetary Authority of Singapore. [36/2014]

(4) Subsection (3)(a) or (b) does not authorise the making of any restricted transaction, except —

(a)	with the prior approval of the company given at a general meeting at which the purposes of the expenditure and the amount or extent of the restricted transaction are disclosed; or
(b)	on condition that, if the prior approval of the company is not given as aforesaid at or before the next following annual general meeting, the amount of or liability under the restricted transaction must be repaid or discharged (as the case may be) within 6 months from the conclusion of that meeting. [36/2014]

(5) Where the prior approval of the company is not given as required by the condition mentioned in subsection (4)(b), the directors authorising the making of the restricted transaction are jointly and severally liable to indemnify the company against any loss arising therefrom.

[36/2014]

(6) Where a company contravenes this section, any director who authorises the making of the restricted transaction shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $20,000 or to imprisonment for a term not exceeding 2 years.

[36/2014]

(7) Nothing in this section operates to prevent the company from recovering the amount of any loan, quasi‑loan, credit transaction or arrangement or amount for which it becomes liable under any guarantee entered into or in respect of any security given contrary to this section.

[36/2014]

(8) For the purpose of subsection (1), a reference to a director or relevant director therein includes a reference to the director’s spouse, son, adopted son, stepson, daughter, adopted daughter and stepdaughter.

[36/2014]

(9) In determining for the purposes of this section whether a transaction is a restricted transaction under subsection (1)(e), the transaction is to be treated as having been entered into on the date of the arrangement.

[36/2014]

(10) For the purposes of this section, a reference to prior approval does not include any approval of the company that is given after the restricted transaction has been made, provided for or entered into (as the case may be).

[36/2014]

(11) In this section and section 163 —

“conditional sale agreement” has the meaning given by section 2 of the Hire‑Purchase Act 1969;

“credit transaction” means a transaction under which one party (called in this section and section 163 the creditor) —

(a)	supplies any goods or disposes of any immovable property under a hire‑purchase agreement or a conditional sale agreement;
(b)	leases or hires any immovable property or goods in return for periodic payments; or
(c)	otherwise disposes of immovable property or supplies goods or services on the understanding that payment (whether in a lump sum or instalments or by way of periodic payments or otherwise) is to be deferred;

“quasi‑loan” means a transaction under which one party (called in this section and section 163 the creditor) agrees to pay, or pays otherwise than pursuant to an agreement, a sum for another (called in this section the borrower) or agrees to reimburse, or reimburses otherwise than pursuant to an agreement, expenditure incurred by another party for another (called in this section and section 163 the borrower) —

(a)	on terms that the borrower (or a person on the borrower’s behalf) will reimburse the creditor; or
(b)	in circumstances giving rise to a liability on the borrower to reimburse the creditor;

“services” means any thing other than goods or immovable property.

[36/2014]

(12) For the purposes of subsection (11) —

(a)	a reference to the person to whom a quasi‑loan is made is a reference to the borrower;
(b)	the liabilities of the borrower under a quasi‑loan include the liabilities of any person who has agreed to reimburse the creditor on behalf of the borrower;
(c)	a reference to the person for whose benefit a credit transaction is entered into is a reference to the person to whom goods, immovable property or services are supplied, sold, leased, hired or otherwise disposed of under the transaction; and
(d)	a reference to the supply of services means the supply of anything other than goods or immovable property and includes the transfer or disposal of choses in action or of intellectual property rights.

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