Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Substantial property transaction definition

What does Substantial property transaction mean? In practice, this refers to a deal where a company and a director (or a person connected with that director) buy or sell a non-cash asset of significant value between them, a related-party transaction that generally requires prior shareholder approval. In the UK, it is a statutory concept under Companies Act 2006, section 190. A company must not enter into an arrangement for a director of the company or its holding company (or their connected persons) to acquire a substantial non-cash asset from the company, or for the company to acquire such an asset from them, unless approved by a resolution...

Members’ approval for substantial property transactions with directors and connected persons under the Companies Act 2006: scope, definitions and exceptions

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Practice notes

The Companies Act 2006 (CA 2006) sets out rules that limit and oversee substantial property transactions carried out between a company and its directors. Such arrangements require approval because they involve directors (or their connected persons) and are viewed as particularly vulnerable to abuse. The interplay between the statutory approval regime for these transactions and the general statutory duties of directors is considered in Practice Note: Directors' duties—scope, nature, interpretation and application.

There are also statutory provisions dealing with the position where a company enters into a substantial property transaction without securing any required members’ approval, or without making the transaction conditional on obtaining that approval (see Practice Note: Substantial property transactions—consequences of a failure to obtain members’ approval). One of the general statutory duties of directors is the obligation to declare to the other directors any way in which they are, directly or indirectly, interested in a proposed transaction or arrangement with the company of which they are a director, together with the nature and extent of that interest...

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Web page updated on 21/05/2026

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