Under the provisions of CA 2006, Part 10, Ch 4, (ss 188–226), the directors must normally obtain prior shareholder approval for the following types of transaction involving a director (or, in certain cases, a person connected to a director) – long-term service contracts; substantial property transactions; loans, quasi-loans and credit transactions; and payments for loss of office (see also CH 6 below).
Section 180 provides that:
(a) compliance with the general duties does not remove the need for member approval of such transactions (sub-s 3);

(b) subject to the exceptions set out in (c) below, the general rules apply even if the transaction also falls within Part 10, Ch 4 (because it is a long term service contract etc). So, for example, the directors should only approve a loan to a director if they consider it would promote the success of the company. This is so, even if the loan does not require the approval of members under Part 10, Ch 4 because it falls within a relevant exemption, such as the exception for expenditure on company business in section 204;

(c) if the transaction is a long-term service contract etc and approval of members is duly obtained, or an exception applies, then the director does not need to comply separately with the duty to avoid conflicts of interest (s 175) or the duty not to accept benefits from third parties (s 176).

All other applicable duties would still apply. For example, a director would not be acting in breach of duty to avoid conflicts of interests if he failed to obtain authorisation from the directors or members for a loan from the company in respect of legal defence costs.

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