• Circumstances In Which Financial Assistance Is Prohibited

    • 617. Assistance for acquisition of shares in public company

      (1) Where a person is acquiring or proposing to acquire shares in a public company, it is not lawful for that company, or a company that is a subsidiary of that company, to give financial assistance directly or indirectly for the purpose of the acquisition before or at the same time as the acquisition takes place, except as provided for by this Chapter.
      (2) Subsection (1) does not prohibit a company from giving financial assistance for the acquisition of shares in it or its holding company if-
      (a) the company’s principal purpose in giving the financial assistance is not to give it for the purpose of any such acquisition, or
      (b) the giving of the financial assistance for that purpose is only an incidental part of some larger purpose of the company,
      and the financial assistance is given in good faith in the interests of the company.
      (3) Where-
      (a) a person has acquired shares in a company, and
      (b) a liability has been incurred (by that or another person) for the purpose of the acquisition,
      it is not lawful for that company, or a company that is a subsidiary of that company, to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability if, at the time the financial assistance is given, the company in which the shares were acquired is a public company.
      (4) Subsection (3) does not prohibit a company from giving financial assistance if-
      (a) the company’s principal purpose in giving the financial assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in the company or its holding company, or
      (b) the reduction or discharge of any such liability is only an incidental part of some larger purpose of the company,
      and the financial assistance is given in good faith in the interests of the company.
      (5) This section has effect subject to sections 620 and 621 (unconditional and conditional exceptions to prohibition).

    • 618. Assistance by public company for acquisition of shares in its private holding company

      (1) Where a person is acquiring or proposing to acquire shares in a private company, it is not lawful for a public company that is a subsidiary of that company to give financial assistance directly or indirectly for the purpose of the acquisition before or at the same time as the acquisition takes place.
      (2) Subsection (1) does not prohibit a company from giving financial assistance for the acquisition of shares in its holding company if-
      (a) the company’s principal purpose in giving the financial assistance is not to give it for the purpose of any such acquisition, or
      (b) the giving of the financial assistance for that purpose is only an incidental part of some larger purpose of the company,
      and the financial assistance is given in good faith in the interests of the company.
      (3) Where-
      (a) a person has acquired shares in a private company, and
      (b) a liability has been incurred (by that or another person) for the purpose of the acquisition,
      it is not lawful for a public company that is a subsidiary of that company to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability.
      (4) Subsection (3) does not prohibit a company from giving financial assistance if-
      (a) the company’s principal purpose in giving the financial assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in its holding company, or
      (b) the reduction or discharge of any such liability is only an incidental part of some larger purpose of the company,
      and the financial assistance is given in good faith in the interests of the company.
      (5) This section has effect subject to sections 620 and 621 (unconditional and conditional exceptions to prohibition).

    • 619. Prohibited financial assistance a contravention of these Regulations

      (1) If a company contravenes section 617(1) or (3) or section 618(1) or (3) (prohibited financial assistance) a contravention of these Regulations is committed by-
      (a) the company, and
      (b) every officer of the company who is in default.
      (2) A person who commits a contravention under this section is liable to a level 3 fine.