Financial assistance—a quick guide

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Financial assistance—a quick guide
  • The prohibition under the CA 2006
  • What is financial assistance?
  • Meaning of financial assistance under the CA 2006
  • Case law
  • Exceptions to the prohibition
  • Consequences of breaching the prohibition
  • Financial assistance under the CA 1985

Financial assistance—a quick guide

The Companies Act 2006 (CA 2006) prohibits:

  1. a public company (or its subsidiary) from giving financial assistance for the acquisition by a person of the company's shares or to reduce or discharge a liability incurred for the purpose of acquiring the shares, and

  2. a public company that is a subsidiary of a private company from giving financial assistance for the acquisition by a person of shares in the private holding company or to reduce or discharge a liability incurred for the purpose of acquiring the shares,

whether that assistance is given before, at the time of, or after the acquisition.

This Practice Note summarises:

  1. details of the prohibition of financial assistance under the CA 2006

  2. the statutory meaning of financial assistance and relevant case law

  3. exceptions to the prohibition of financial assistance

  4. the consequences of breaching the prohibition, and

  5. the financial assistance regime under the Companies Act 1985 (CA 1985)

This Practice Note is intended to be a quick guide to financial assistance. Further details can be found in the following Practice Notes:

  1. Financial assistance—what does it mean?

  2. Financial assistance—common scenarios in practice

  3. Financial assistance—private companies

  4. Financial assistance—when does the prohibition apply?, and

  5. Financial assistance—the exceptions to the prohibition

The prohibition under the CA 2006

Where shares in a UK public company are acquired or proposed to be acquired, it is unlawful for that company,

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