The administrators challenged the validity of a charge which appeared to have been given by the company to secure the purchase of shares in the company.
Held: The loan itself did not amount to assistance, but the charge did. It was indirect financial assistance. The company officers had not complied with the necessary whitewash procedures to validate the transaction. The declaration made by the officers was incorrect, but viewed as a whole and in the light of the possible severe consequences to the officers, it could be viewed to be correct. Even so, it was unenforceable because it contravened section 151, in which case the availability of the whitewash procedure whether successfully implemented or not, did not rescue the charge. It was unenforcable.
Citations:
Times 11-Jun-2004, [2005] 1 BCLC 41
Statutes:
Companies Act 1985 155 156 157 158
Jurisdiction:
England and Wales
Citing:
Cited – Central and Eastern Trust Co v Irving Oil Ltd 1980
(Canada) Indirect financial assistance in purchase of company’s shares. . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 16 May 2022; Ref: scu.198128