Section 206 - Payments to directors for loss of office

(1) A company shall not make a payment to a director or former director of the company or an associated company,

(a) by way of compensation for loss of an office in the company or an associated company, or

(b) as consideration for or in connection with retirement from office of that director or former director,

without particulars of the proposed payment, including the amount of the payment, being disclosed to the members of the company and the proposal being approved by an ordinary resolution of the company agreed to or passed in the manner provided by section 193.

(2) A payment shall not be made, whether by the company or otherwise, to a director or former director of a company in connection with the transfer of the whole or a part of the undertaking or property of the company or an associated company, whether the payment is expressed to be by way of compensation for loss of office or otherwise, unless particulars of the proposed payment, including the amount of the payment have been disclosed to the members of the company and the proposal approved by an ordinary resolution of the company agreed to or passed in the manner provided by section 193.

(3) Where a payment is made in contravention of this section, the amount of the payment shall be regarded as money of the company used by a director for the advantage of the director within the meaning of section 192.