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Companies Act, 1973 (Act No. 61 of 1973)

Chapter XI: Accounting and Disclosure

Disclosure of Certain Matters in Financial Statements

296. Annual financial statements to disclose loans made to and security provided for benefit of directors or managers before their appointment

 

 

1) The annual financial statements of a company shall state-
a) the amount and particulars of every loan which has at any time been made by the company to any person before his appointment as director or manager of the company, if-
i) the loan was still in existence at the date of such appointment; and
ii) such appointment was made at any time during the financial year concerned; and
b) the particulars of every security (and of the transaction to which it relates) which has at any time been provided by the company for the benefit of any person before his appointment as director or manager of the company, if-
i) the security was still in existence at the date of such appointment; and
ii) such appointment was made at any time during the financial year concerned.

 

2) For the purposes of subsection (1)-
a) "loan" includes-
i) a loan of money, shares, debentures or any other property; and
ii) any credit extended by a company where the debt concerned is not payable or being paid in accordance with normal business practice in respect of payment of debts of the same kind; and
b) "security" includes a guarantee.

 

3) The provisions of section 295(2), (3) and (4) shall mutatis mutandis apply with reference to loans and securities contemplated in this section.

 

4) This section shall not apply in respect of a loan made or security provided bona fide in the ordinary course of the business of a company actually and regularly carrying on the business of the making of loans or the provision of security.

 


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