Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Reading:
E. Ferran, Company Law and Corporate Finance, (1999) 372 - 407
Lead cases:
Arab Bank Plc v Merchantile Ltd [1994] Ch 871
British and Commonwealth Holding Plc v Barclays Bank [1995] BCC 1059
Brady v Brady [1989] AC 755
Head (Henry) v O’Connor [1971] 1 WLR 497
Carney v Herbert [1985] 1 All ER 438
Belmont Finance Corp. Ltd v Williams Furniture Ltd [1979] Ch 250
Robert Chaston v. SWP Group Plc [2002] EWCA Civ 1999
MT Realisations Ltd (in liquidation) v. Digital Equipment Co. Ltd [2003] EWCA Civ
494
Where the financial assistance does not fall within s 152(1)(a)(i),(ii) or (iii):
In that case, the financial assistance will be unlawful if the company has no net assets or if the
consequence of the assistance is to reduce its net assets “to a material extent”: see s 152(1)(iv)
C. The Exceptions
Procedural Requirements
Step I – Check that the company giving the financial assistance has the capacity to give
the assistance
Step II – Check that the company has the net assets (as shown in the accounts, that is, its
assets must exceed its liabilities including contingent and prospective liabilities) which are
not reduced by the financial assistance or, to the extent that they are, that there is
sufficient distributable profits
Step III – Directors make a statutory declaration of solvency complying with s 156 which must
have annexed to it a report of the company’s auditors identifying the person to whom
assistance is to be given and the nature of the assistance and stating that they have
enquired into the state of affairs of the company and that they are not aware of anything
to indicate that the directors’ opinion is unreasonable in the circumstances;
Step IV – the approval of the shareholders of the company giving the financial assistance
should be obtained by a special resolution (or written resolution under s 381A): This
requirement does not apply where a wholly owned subsidiary is giving the assistance (s
155(4). Note that objecting members have a right to apply to court for its cancellation: s
157(2)
Step V – the financial assistance must be given within 8 weeks of the date of the
directors’ statutory declaration
Step VI – the company giving the financial assistance shall comply with its filing
requirements by delivering to the registrar a copy of each statutory declaration and annexed
auditors’ report: s 156(5)
Criminal sanctions:
S 151(3), see s 744 for the definition of “officer” and s 730(5) which identifies the
officers that will be liable
Articles
Cabrelli, “In Dire Need of Assistance?: Companies Act 1985 revisited” (2002) JBL 272
Pettet “Developments in the Law of Financial Assistance for the Purchase of Shares” (1988) 3
JIBL 96;
Pettet “Financial Assistance for the Acquisition of Shares: Further Developments (1995) 10
JIBL 388.