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Chaston v SWP Group Plc

[2003] 1 BCLC 675

Case summary last updated at 23/01/2020 15:38 by the Oxbridge Notes in-house law team.

Judgement for the case Chaston v SWP Group Plc

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!

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