Declaring an interest in an existing transaction

Q: How does this work in practice?

Illustration only. Sarah is appointed finance director of a manufacturing company in March. The company has for three years rented its warehouse from a property company in which Sarah's father holds 30% of the shares. Her father is a connected person under section 253, and through him she is connected with the property company under section 254. At her first board meeting Sarah declares that her father owns 30% of the landlord and that she has no shareholding herself. The declaration is minuted. Because rent reviews and renewals will follow, she also gives general notice under section 185 that she is to be regarded as interested in any future transaction with the landlord, and the notice is read at that meeting. If her father later sells his shares, she updates the board under section 182(3).

Section 182 of the Companies Act 2006 requires a director who is directly or indirectly interested in a transaction or arrangement the company has already entered into to declare the nature and extent of that interest to the other directors as soon as reasonably practicable, unless it was declared under section 177 before the deal was made. Failing to do so is a criminal offence under section 183, punishable by a fine. It typically catches directors who join a board with existing contracts, or whose interest arises after a contract is signed.

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When does section 182 apply rather than section 177?

The two sections divide the timeline. Section 177 covers proposed transactions and requires a declaration before the company enters into them. Section 182 covers transactions and arrangements that have already been entered into. The explanatory notes to the Act (paragraph 362) make the split explicit, and paragraph 365 confirms that a director who properly declared under section 177 does not need to repeat the declaration once the deal becomes an existing one.

So section 182 is the safety net for interests that were never declared under section 177. Our guide to declaring an interest in a proposed transaction deals with section 177 and the voting rules in the model articles. This page concentrates on existing deals and the offence.

What situations typically trigger a section 182 declaration?

Section 182(1) applies where a director is “in any way, directly or indirectly, interested” in a transaction or arrangement entered into by the company. The explanatory notes (paragraph 363) say the director need not be a party; a transaction between the company and the director’s spouse may give rise to an indirect interest. Common triggers include:

A new appointment. A director joins the board of a company that already leases premises from the director’s family property company, or already buys from a business the director part owns. The interest predates the directorship, so section 177 never applied. See our guide to appointing a director.
An interest arising after signing. The director buys shares in an existing supplier, inherits an interest in the company’s landlord, or a relative becomes a partner in the firm that provides the company’s IT.
A change in an existing interest. A director who declared a 10% stake in a supplier later increases it to a controlling stake. Section 182(3) requires a further declaration where an earlier one proves to be, or becomes, inaccurate or incomplete, and paragraph 368 of the notes says this applies where the interest changes.
A missed section 177 declaration. The deal was signed without the declaration it needed. Section 182 then requires a declaration as soon as reasonably practicable, which limits the harm but does not cure the earlier breach.

The Act does not define “interested”, but the connected person rules in sections 252 to 254 are a useful checklist. Section 253 treats as family a spouse or civil partner, a partner in an enduring family relationship, children and step children, and parents. Under section 254 a director is connected with a body corporate if the director and connected persons together hold at least 20% of its equity share capital or control more than 20% of the voting power.

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How quickly must the declaration be made?

Section 182(4) requires the declaration as soon as is reasonably practicable. It adds that failing to meet that timing does not remove the underlying duty, so a late declaration must still be made. The explanatory notes (paragraph 368) say the same.

Under section 182(5) a director need not declare an interest, or a transaction, they are not aware of, but is treated as aware of anything they ought reasonably to be aware of. The notes (paragraph 367) put it directly: a director fails to comply if they fail to declare something they ought reasonably to have known. A director who has never checked which suppliers their relatives work for is exposed by that rule.

How must the declaration be made?

Section 182 is stricter than section 177 about method. Section 182(2) requires one of three routes:

At a meeting of the directors. The declaration is minuted. Section 248 requires minutes of all directors’ meetings to be kept for at least ten years.
By notice in writing under section 184. The notice goes to the other directors, in hard copy or in an agreed electronic form. It is deemed to form part of the proceedings at the next directors’ meeting and section 248 applies as if it had been made there.
By general notice under section 185. The director declares an interest in a specified body corporate or firm, or a connection with a specified person, and is treated as interested in later transactions with them. It must state the nature and extent of the interest or the nature of the connection, and is effective only if given at a meeting or the director takes reasonable steps to have it brought up and read at the next one.

Whichever route is used, the content must be the nature and extent of the interest (section 182(1) and paragraph 364 of the notes), for example “my wife owns 40% of the company’s landlord”, not simply “I have an interest”.

When is no declaration needed?

Section 182(6) gives three exceptions:

the interest cannot reasonably be regarded as likely to give rise to a conflict of interest;
the other directors are already aware of it, or ought reasonably to be aware of it; or
it concerns terms of the director’s service contract that have been or are to be considered by a directors’ meeting or a committee appointed for the purpose under the constitution.

The “already aware” exception is the one most relied on in small companies, and the one most often argued about later. A board minute recording the interest removes any doubt.

What is the criminal penalty?

Section 183 makes it an offence for a director to fail to comply with section 182. On conviction on indictment the penalty is a fine; the explanatory notes (paragraph 370) describe this as an unlimited fine. On summary conviction the fine cannot exceed the statutory maximum.

The same paragraph of the notes says section 183 does not affect the validity of the transaction and does not impose any other civil consequences for the failure. That is the key contrast with section 177, which is one of the general duties: breach of section 177 carries the civil consequences set by section 178, while breach of section 182 is purely a criminal matter under that section. Where a declaration was missed before signing, both can be in play: a civil breach of section 177 for the original omission and a criminal offence if the director then fails to declare under section 182.

What about sole directors and shadow directors?

The explanatory notes (paragraph 374) say a sole director does not need to comply with section 182, because there are no other directors to declare to. Section 186 makes an exception for a company that is required to have more than one director, such as a public company, but has only one: the declaration must be recorded in writing and is treated as part of the next directors’ meeting.

Section 186(2) preserves section 231, which applies where a limited company with one member contracts with that member, who is also a director, outside the ordinary course of business. Unless the contract is in writing, its terms must be set out in a written memorandum or recorded in the minutes of the first directors’ meeting after it is made. Failure is an offence by every officer in default, punishable on summary conviction by a fine up to level 5 on the standard scale, but the contract remains valid. Our guide to sole director decisions covers recording decisions more generally.

Under section 187, a shadow director must also comply, but cannot declare at a meeting; the declaration must be by written notice under section 184, and a general notice is effective only if given in that way.

How does this work in practice?

Illustration only. Sarah is appointed finance director of a manufacturing company in March. The company has for three years rented its warehouse from a property company in which Sarah’s father holds 30% of the shares. Her father is a connected person under section 253, and through him she is connected with the property company under section 254.

At her first board meeting Sarah declares that her father owns 30% of the landlord and that she has no shareholding herself. The declaration is minuted. Because rent reviews and renewals will follow, she also gives general notice under section 185 that she is to be regarded as interested in any future transaction with the landlord, and the notice is read at that meeting. If her father later sells his shares, she updates the board under section 182(3).

What mistakes do directors make?

Assuming the duty only applies to new contracts. Leases, loans, supply agreements and other continuing arrangements are all transactions already entered into.
Telling one fellow director informally and assuming the board knows.
Not updating a general notice when a shareholding or family relationship changes.
Thinking a late declaration is pointless. Section 182(4) says it must still be made.
Confusing this duty with personal benefits from outsiders, which fall under section 176, or with situational conflicts under section 175.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.