Financial assistance and share schemes
Financial assistance and share schemes

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

  • Financial assistance and share schemes
  • The meaning of financial assistance—overview
  • Types of companies to which the rules apply
  • Assistance for the acquisition of shares in a public company
  • Assistance by a public company for the acquisition of shares in its private holding company
  • Statutory definition of financial assistance
  • Financial assistance that is not prohibited
  • Additional conditions that apply for public companies
  • Application of the financial assistance rules to share schemes
  • Structure of award
  • More...

The meaning of financial assistance—overview

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:

  1. Charterhouse Investment Trust Ltd v Tempest Diesels Ltd, and

  2. Wallersteiner v Moir

The consequences of providing unlawful financial assistance can be severe—see: Consequences of contravening the financial assistance rules, below.

Types of companies to which the rules apply

The financial assistance rules apply to:

  1. UK public companies

  2. private companies that are subsidiaries of UK public companies, and

  3. private companies with UK public company subsidiaries (where financial assistance is being given by the public company)

Assistance for the acquisition of shares in a 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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