D was director of a subsidiary of a parent company which was subject to a takeover bid. Subsidiary company incurred liability to pay accountants’ fees in respect of the transaction (£20,000); actual cost of takeover itself was £2.5 million. D, as director of company alleged to have given financial assistance, was sued. Held:
· Paying of accountants’ fees was financial assistance
· This because it smoothed the path to the acquisition of shares
Ø i.e. reduced the transaction cost for purchaser
Ø thus acted as a financial incentive to buy parent company’s shares
· This even though cost of accountant’s fees were dwarfed by cost of takeover!