When looking at transactions challenged under the Act, the court must look to the ‘commercial realities’ of what had taken place. ‘There is no definition of giving financial assistance in the Section although some examples are given. The words have no technical meaning and their frame of reference is in my judgment the language of … Continue reading Charterhouse Investment Trust Ltd v Tempest Diesels Ltd: ChD 1986
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Auditors who were in a position to advise a company’s directors as to the legality of them making loan payments to a shell company which was acquiring there shares had a duty so to advise. The directors of a company sued them for failing to warn them that a loan made by the company might … Continue reading Coulthard, Ashton Shuttleworth, and Dawes v Neville Russell (a Firm): CA 27 Nov 1997
A court may make a pre-emptive award of costs to pension fund members who wished to sue the trustees. Hoffmann LJ said: ‘if one looks at the economic relationships involved, there does seem to me to be a compelling analogy between a minority shareholder’s action for damages on behalf of the company and an action … Continue reading McDonald and Others v Horn and Others: CA 8 Aug 1994
The word ‘and’ in sections 423(2)(a) and 423(2)(b) is to be read conjunctively not disjunctively. Section 238(3) is to be interpreted as requiring restoration of the former position ‘as far as possible’ or ‘as far as practicable’, and that accordingly subsequent events were not an absolute bar against setting aside the sale. Nourse LJ: ‘The … Continue reading Chohan v Saggar and Another: CA 27 Dec 1993
Saad Investments was a Cayman Islands company in liquidation. The liquidator brought an action here, but the defendant sought a stay saying that another forum was clearly more appropriate. Shares in Saudi banks were said to be held in trust for the company, but Saudi law would not recognise such trusts. The shares had been … Continue reading Akers and Others v Samba Financial Group: SC 1 Feb 2017
The company sought to say that loans of 15 million pounds were void under s151 of the 1985 Act. It was said that the loans infringed the provisions of s151 being unlawful financial assistance. Held: The loans were valid: ‘if it is lawful for a company to repay its own indebtedness and there is a … Continue reading Anglo Petroleum Ltd v TFB (Mortgages) Ltd: ChD 24 Feb 2006
Mrs D had gone into business with the respondents to operate a residential care home. It was to be run from premises owned by the respondents. The respondents inter alia had failed to disclose previous convictions, the registration was cancelled, and the company was insolvent. Heads of agreement with an attached draft lease had been … Continue reading Dyment v Boyden and others: CA 26 Nov 2004
Disputes arose between shareholders in a family company. Proceedings which expressly excluded the company were settled, but the company became insolvent. A later settlement was refused approval by the judge without the creditors consent. The claimant now sought a declaration that the earlier compromise bound the company. The company argued that the agreement was conditional … Continue reading Thakrar v Ciro Citterio Menswear Plc In Administration: ChD 1 Oct 2002
The company was insolvent, depending upon loans to it from its parent company. In the liquidation, it was claimed that in a scheme for the acquisition of the shares, the assumption of liability to repay a loan amounted to unlawful financial assistance in the acquisition of its shares. The claimant company appealed a striking out … Continue reading MT Realisations Limited (In Liquidation) v Digital Equipment Co Limited: CA 10 Apr 2003
Sympathetic construction of national legislation LMA OVIEDO sought a declaration that the contracts setting up Commercial International were void (a nullity) since they had been drawn up in order to defraud creditors. Commercial International relied on an EC Directive designed to protect companies and third parties from the adverse effects of the doctrine of nullity. … Continue reading Marleasing SA v La Comercial Internacional de Alimentacion SA: ECJ 13 Nov 1990
