Financial Assistance

Financial Assistance in United Kingdom

Definition of Financial Assistance

In accordance with the work A Dictionary of Law, this is a description of Financial Assistance : (in company law)

A loan, guarantee, security, indemnity, or gift by a registered company or any of its subsidiaries made for the purpose of assisting someone to acquire its shares. Under the Companies Act 1985, this is unlawful unless it can be shown that the company’s principal purpose for giving the assistance was not to finance the acquisition of its shares or that the assistance was an incidental part of another, larger, purpose of the company. A *private company may make such transactions, however, if the directors make a declaration, supported by the company’s auditors, to the effect that the company is able to pay all its debts for at least one year following the assistance being given. In addition, the Companies Act 1985 lays down a strict timetable for providing the assistance, which must be complied with by the private company.

Financial assistance for purchase of its own shares (ss677–683)


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