#4956 - Financial Assistance - Business Law and Practice

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