Singapore legislation
Clause 16
Clause 16
New section 133A
The principal Act is hereby amended by inserting immediately after section 133 thereof the following section: —“Prohibition of loans to persons connected with directors of lending company133A.—
Subject to the provisions of this section, it shall not be lawful for a company —
to make a loan to another company; or
to enter into any guarantee or provide any security in connection with a loan made to another company by a person other than the first-mentioned company,if a director or directors of the first-mentioned company is or together are interested in shares in the other company of a nominal value equal to one-fifth or more of the nominal value of its equity share capital.(2) Subject to the provisions of this section, it shall not be lawful for a company —
to make a loan to a person who is a member of the family of any of its directors or of a director of its holding company; or
to enter into any guarantee or provide any security in connection with a loan made to any such person by any other person.(3) Subsection (1) of this section shall not apply to anything done by a company where the other company is its subsidiary or holding company or a subsidiary of its holding company; and neither subsection (1) nor subsection (2) of this section shall apply, in the case of a company whose ordinary business includes the lending of money or the giving of guarantees in connection with loans made by other persons, to anything done by the company in the ordinary course of that business.(4) For the purposes of subsection (1) of this section an interest of a member of a director’s family shall be treated as an interest of the director.”.