COMPANIES ACT 1963 – SECT 189 Provisions supplementary to sections 186, 187 and 188.
189.—(1) Where in proceedings for the recovery of any payment as having, by virtue of subsections (1) and (2) of section 187 or subsections (1) and (3) of section 188, been received by any person in trust, it is shown that—
( a ) the payment was made in pursuance of any arrangement entered into as part of the agreement for the transfer in question, or within one year before or 2 years after that agreement or the offer leading thereto; and
( b ) the company or any person to whom the transfer was made was privy to that arrangement;
the payment shall be deemed, except in so far as the contrary is shown, to be one to which the subsections apply.
(2) If in connection with any such transfer as is mentioned in section 187 or section 188—
( a ) the price to be paid to a director of the company for any shares in the company held by him is in excess of the price which could at the time have been obtained by other holders of the like shares; or
( b ) any valuable consideration is given to any such director,
the excess or the money value of the consideration, as the case may be, shall, for the purposes of that section, be deemed to have been a payment made to him by way of compensation for loss of office or as consideration for or in connection with his retirement from office.
(3) It is hereby declared that references in sections 186, 187 and 188 to payments to any director of a company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, include payments to him by way of compensation for loss of office as director of the company or for the loss, while director of the company, or on or in connection with his ceasing to be a director of the company, of any other office in connection with the management of the company’s affairs or of any office as director or otherwise in connection with the management of the affairs of any subsidiary company but do not include any bona fide payment by way of damages for breach of contract or by way of pension in respect of past services, and for the purposes of this subsection “pension” includes any superannuation allowance, superannuation gratuity or similar payment.
(4) Nothing in sections 187 and 188 shall be taken to prejudice the operation of any rule of law requiring disclosure to be made with respect to any such payments as are therein mentioned or with respect to any other like payments made or to be made to the directors of a company or to prejudice the operation of any rule of law in relation to the accountability (if any) of any director for any such payment received by him.
(5) References in sections 186, 187, 188 and this section to a director include references to a past-director.