Commentary

Section 156 Unlawful loans—Section 197

COMPANIES vol 11 acquisitions, mergers, demergers

Section 156 Unlawful loans—Section 197

156 Unlawful loans—Section 197

Where the management of the target company in a management buy-out situation needs to borrow in order to buy the shares in the target company, the lenders will often look to the assets of the target company to provide security because the managers will often not have the personal unincumbered resources to provide sufficient security themselves.

Apart from the financial assistance implications of the provision of such security, there will be other considerations if members of the management team itself are to purchase the target company’s shares directly and some or all of those members already are,

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