Section 207 - Payments to directors in connection with take-over bids

(1) An offer for the acquisition of shares of a company may be made on the terms that the offer is available for acceptance,

(a) by the members of the company or by the holders of shares of the class to which the offer relates, or

(b) by the holders of shares which, together with the shares already owned beneficially by the person making the offer or by a body corporate in which that person is the controlling member, confer the right to exercise or control the exercise of not less than one third of the voting power at a general meeting of the company.

(2) Where an offer for the acquisition of shares is made under subsection (1), and in connection with that offer it is proposed that a payment shall be made or a payment has been made to a director or former director of the company or an associated company, over and above the receipt by the director or former director in respect of the same price as may be receivable by other holders of the shares of the same class, that director or former director shall take reasonable steps to secure that, particulars of the payment are included in or sent with the notice of the offer made for their shares which is given to the shareholders.

(3) Where

(a) the director or former director fails to take the reasonable steps, or

(b) a person who has been properly required by that director or former director to include the particulars in or send them with the notice fails to do so,

that director or former director or that person acting on the directives of the director or former director under paragraph (b) commits an offence and is liable on summary conviction to a fine of not less than two hundred penalty units and not more than four hundred penalty units.

(4) The payment shall be distributed in the manner provided by subsection (5) unless

(a) the requirements of subsection (1) are complied with, and

(b) the making of the payment is, before the transfer of shares in pursuance of the offer, approved by an ordinary resolution,

(i) agreed to by the holders of the shares to which the offer relates, or

(ii) passed at a meeting, summoned for that purpose by notice complying with subsection (7), of the holders at which neither the director concerned nor the holders of the shares in which the director or former director is beneficially interested, directly or indirectly, have voted on the resolution.

(5) Where a payment is to be distributed in accordance with subsection (4), the person making or proposing to make the payment and the director or former director to whom it is made or proposed to be made are jointly and severally liable to distribute the payment among the persons who have sold their shares as a result of the offer in proportion to the number of shares sold by them, and if a director or former director receives the payment, that director or former director shall hold the payment in trust for those persons.

(6) For the purposes of subsection (5),

(a) the expenses incurred in distributing the payment shall be borne by the persons liable to make the distribution and not retained out of the payment;

(b) if, in proceedings instituted before the expiration of three months from the first transfer of shares in pursuance of the offer, the Court awards or approves the payment of damages to the director or former director for breach of a valid service agreement, the amount of the damages, but not the costs or expenses incurred in connection with proceedings, shall be paid to or retained by the director or former director out of the payment and only the balance of the payment shall be distributable.

(7) The notice of a general meeting summoned for the purposes of subsection (4) shall be convened, held and conducted as nearly as may be in accordance with this Act or the constitution of a company relating to general meetings of the company.

(8) The notices convening the meeting shall state that if the resolution approving the payment is not passed, the payment will be distributable among the persons who have sold their shares in pursuance of the offer except to the extent that the Court may award or approve the payment to the director or former director concerned with damages for breach of a valid service agreement.

(9) An offer referred to in subsection (1) shall not be made conditional on approval of a payment or proposed payment to a director or former director and, if an offer is expressed to be made subject to that condition, the condition is void.

(10) For the purposes of paragraph (b) of subsection (1),

(a) where the offer is made by a body corporate, the shares are owned beneficially by that body corporate if the shares are owned beneficially by the body corporate or by any of its associated companies or by any controlling member of the body corporate; and

(b) a person is a controlling member of a body corporate if that body corporate or directors of that body corporate are accustomed to act in accordance with the directions or instructions of that person or a nominee of that person or if, at a general meeting of that body corporate, that person is entitled to exercise or control the exercise of one-third or more of the voting power.