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Financial Assistance Notes

LPC Law Notes > Business Law and Practice Notes

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A more recent version of these Financial Assistance notes – written by Cambridge And Oxilp And College Of Law students – is available here.

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Financial assistance

1) Has there been an acquisition of shares?

1) Applies to a share sale

2) Applies to a share issue

2) Is this a company to which the prohibition applies?

1) The target company is a public company s.678(1) and (3) CA 2006

a) The prohibition applies to the target public company itself; and

b) Any subsidiary of the target company, whether private or public

2) The target company is a private company s.679(1) and (3)

3) Is the target or its subsidiary giving direct or indirect financial assistance?

1) Financial assistance by way of gift (direct)
- s.677(1)(a)

2) Financial assistance by way of guarantee, security, indemnity, release or waiver (indirect) - s.677(1)(b)

3) Financial assistance by way of loan or similar agreement (direct) - s.677(1)(c)

4) Any other financial assistance where the net assets of the company are reduced by a material extent by giving financial assistance
- s.677(1)(d)

4) When is the financial assistance given?

1) Before or at the same time as the acquisition for the purpose of the acquisition
- s.678(1) and s.679(1)

2) After the acquisition, for the purpose of releasing or discharging a liability incurred for the acquisition - s.678(3) and s.679(3)

a) The prohibition only applies to any public subsidiary of the target company

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