Yes the rules in S.239 & S.240 Companies Act 2014 apply not only to the directors but also to connected parties of those directors.
A connected person is defined in S.220 as a person that is connected to a director in the following ways:-
- a director’s spouse, civil partner, parent, brother, sister or child;
- a person acting in his or her capacity as the trustee of any trust, the principal;
- beneficiaries of which are that director, the spouse (or civil partner) or any;
- children of that director;
- or any body corporate which that director controls (50% or more of the equity whether directly or not or through a connected person whether control is exercised or not); or
- in partnership with that director.
- Connected persons however are not just “persons” as companies may be deemed to be connected persons also if a body corporate is controlled by the director or controlled by another body corporate that is controlled by the director. Control in this instance is defined as the director and other directors of the company or persons connected with the director.
- are interested in 50% or more of the shares of the body; or
- are entitled to exercise one-half or more of the voting power at a general meeting of the body
- S.221 Shadow Directors (who are individuals) – persons giving instructions to the director are related parties and should be considered.
- S.222 De-Facto Directors – carrying out the duties of director although not formally appointed a director.
- Note Section 33 of FRS 102 would expand the definition of related parties and would include mother/father in laws.