| Commentary

14 General prohibition

| Commentary

2: FINANCIAL ASSISTANCE

14 General prohibition

A company issuing shares as part of a takeover or company reorganisation may be called upon to lend money to the potential shareholders or parties connected to them in order to facilitate the transaction, or be asked to guarantee borrowing by the shareholders or otherwise provide security to enable the finance to go ahead. If so, the parties must take care that they do not contravene Section 678 of the Companies Act 2006 on financial assistance, particularly where the company is a public company.

Section 678 prohibits the giving by a public company (or its subsidiaries)

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