Seal a deal or borrow money
A Public Limited Company (PLC) must apply for a Trading certificate before starting business.
If your PLC do business or exercises any borrowing powers in contravention of section 761 of the Companies Act 2006, an offence is committed by the company, and every officer of the company who is in default.
Conviction and fine
A person guilty of an offence under section 767 subsection (1) of the Companies Act 2006 is liable:
(a) on conviction on indictment, to a fine;
(b) on summary conviction, to a fine not exceeding the statutory maximum.
The transaction still valid
A contravention of section 761 does not affect the validity of a transaction entered into by the company, but if a company
(a) enters into a transaction in contravention of that section, and
(b) fails to comply with its obligations in connection with the transaction within 21 days from being called on to do so, the directors of the company are jointly and severally liable to indemnify any other party to the transaction in respect of any loss or damage suffered by him by reason of the company's failure to comply with its obligations.
Who is liable?
The directors who are so liable are those who were directors at the time the company entered into the transaction.