Article 54 - Prohibition of Financial Assistance to Directors
(1) Without the consent of any Member or Members holding in the aggregate not less than 90 percent of the total voting rights of all the Members having the right to vote at any meeting of the Members it shall not be lawful for an Investment Club to make a loan or similar form of financial assistance to any person who is its director or a director of its Holding Company, or to enter into any guarantee or provide security in connection with any financial assistance made to such person as aforesaid by any other person provided that nothing in this Article 54 shall apply to either:
a. subject to Article 54(2) anything done to provide any such person as aforesaid with funds to meet expenditure incurred or to be incurred by him for the purposes of the Investment Club or for the purpose of enabling him properly to perform his duties as an Officer of the Investment Club; or
b. any financial assistance prescribed in rules made by the QFC Authority.
(2) The proviso stated at Article 54(1)(a) shall not authorise the making of any financial assistance, or the entering into of any guarantee, or the provision of any security, except either:
a. with the prior agreement of the Investment Club given at a general meeting at which the purposes of the expenditure and the amount of the financial assistance or the extent of the guarantee or security, as the case may be, are disclosed; or
b. on condition that, if the approval of the Investment Club is not given as aforesaid at or before the next following annual general meeting, the financial assistance shall be repaid or the liability under the guarantee or security shall be discharged, as the case may be, within 6 months from the conclusion of that meeting.
(3) Where the approval of the Investment Club is not given as required by any such condition, the directors authorising the making of the financial assistance, or entering into the guarantee, or the provision of security, shall be jointly and severally liable to indemnify the Investment Club against any loss arising therefrom.
(4) For the purposes of this Article 54 a financial assistance shall not be deemed to have been made in the ordinary course of business of an Investment Club if it has not been made on normal commercial terms including in respect of interest rates, repayment terms and security.
(5) Financial assistance shall be deemed to be financial assistance to a director if it is made to or in favour of:
a. a spouse or child of a director; or
b. a Body Corporate of which a director or his spouse or child (or any of them together) owns or controls directly or indirectly more than 20 percent of the share capital.
|Derived (as from 20th December 2016).|