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 genuine commercial justification it must also equally be lawful to the company to assist that repayment by providing security’.
Judges:
Peter Smith J
Citations:
[2006] EWHC 258 (Ch)
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
Cited – Gradwell (PTY) v Rostra Printers Ltd 1959
(South Africa) An offer was made of andpound;42,000 for the shares and the loan account that was then outstanding to the parent company less amounts owed to lenders on first mortgages. An analysis showed that andpound;40,258 was owed on the loan . .
Cited – Chaston v SWP Group Plc CA 20-Dec-2002
The ‘general mischief’ of Section 151 was to stop the resources of the target company and its subsidiaries being used directly or indirectly to assist the purchase financially to make the acquisition. The reason for this is that it might prejudice . .
Cited – Armour Hick Northern Ltd v Whitehouse; Armour Trust Ltd ChD 1980
A vendor company was assisted by financial assistance given by a subsidiary.
Held: The use of money by a company to repay its existing indebtedness would not normally fall within the concept of the company giving financial assistance to . .
Cited – Charterhouse Investment Trust Ltd v Tempest Diesels Ltd ChD 1986
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 . .
Cited – In re Wellington Publishing Company Ltd 1973
(New Zealand) The company a target of a takeover raised money (including by raising a loan on security of the company’s assets). Those were then used to declare lawful dividends which were then declared to the takeover shareholder.
Held: The . .
Cited – Pearce v Brooks 1866
The contract was for the hire of an ornamental brougham to a prostitute which was supplied with knowledge that it would be used ‘as part of her display’. She returned it in a damaged condition, and refused to make any payments under the contract as . .
Cited by:
Cited – Parkingeye Ltd v Somerfield Stores Ltd CA 17-Oct-2012
The claimant company operated parking management for the defendant, charging customers for overparking. The defendant came to believe that the claimant’s behaviour was over-aggressive, and the use of falsehoods, and terminated the contract. The . .
Appeal from – Anglo Petroleum Ltd and Another v TFB (Mortgages) Ltd CA 16-May-2007
Challenge to validity of mortgages executed by company – allegation that funds used for financial assistance in purchase of own shares – effect on loan.
Toulson LJ approved the case of Waugh v Morris, saying: ‘130 years later, this statement of . .
Lists of cited by and citing cases may be incomplete.
Company, Contract
Updated: 05 July 2022; Ref: scu.238708