10@12 Webinar: Payments to Directors: Challenge and Justification 08/07/22
7th July 2022
Unlike payments to employees and third parties, transfers of company assets to directors often involve a more tentative classification. The motivations for such payments can range from tax efficiency, to avoiding the implications of employment law, to clear examples of asset-stripping on the eve of insolvency. Such payments will regularly be in tension with the Company’s Articles, the formalities of the Companies Act 2006, the insolvency legislation, and the directors’ fiduciary duties.
- How should transfers be classified?
- Why does the classification of the transfer matter?
- Does the basis for the transfer need to be identified at the time? Is retrospective classification permissible?
- Can a theoretically ‘permissible’ classification nevertheless be in breach of a director’s duties?
- Can unjust enrichment (quantum meruit) be used as an alternative basis for directors to retain sums?
- What issues do directors’ loan accounts (DLAs) raise?
- What can an insolvency office-holder do to recover sums paid?
- Where is the dividing line between company claims and office-holder claims?
- When can a bankruptcy petition be premised on a payment to a director?
- What are the key takeaways on justifying and challenging payments to directors?