The following Share Incentives practice note provides comprehensive and up to date legal information covering:
Financial assistance is a term defined by the Companies Act 2006 (CA 2006). In summary it is any form of assistance given by a company to purchase shares in that company, where finance is given to facilitate that purchase. See below for the types of company to which these rules apply, as well as details of what constitutes finance for these purposes.
If assistance is being provided, it will be financial assistance if some form of money or something of monetary value is involved. However, the assistance does not necessarily have to cost anything for the person who is providing it.
The following cases give further detail on the meaning of financial assistance:
Charterhouse Investment Trust Ltd v Tempest Diesels Ltd, and
Wallersteiner v Moir
The consequences of providing unlawful financial assistance can be severe—see: Consequences of contravening the financial assistance rules, below.
The financial assistance rules apply to:
UK public companies
private companies that are subsidiaries of UK public companies, and
private companies with UK public company subsidiaries (where financial assistance is being given by the public company)
Where a person is acquiring or proposing to acquire shares in a UK public company, it is not lawful for that company, or a company that is a subsidiary of
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