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 if its claims on the basis that the agreement pay andpound;6.5m under the assignment was not a liability incurred ‘for the purpose of’ the acquisition of MTR’s shares.
Held: The Chaston case could properly be distinguished. Any financial assistance which might have taken place, took place after the relevant date.
Lord Justice Mummery Lord Justice May The President
[2003] EWCA Civ 494, [2003] 2 BCLC 117, [2003] BCC 415
Bailii
Companies Act 1985 151 152
England and Wales
Citing:
Cited – Re VGM Holdings Limited CA 1942
In response to notorious scandals and great dissatisfaction caused by the speculative activities of asset strippers after the First World War, Parliament had decided to criminalise the giving of financial assistance by a company for the purpose of . .
Distinguished – Chaston v SWP Group plc CA 2002
The court considered the legislative history of attempts to prevent asset stripping. A liability to pay money was incurred by a company (and payment was in fact made by the company) in order to facilitate the purchase of shares in it.
Held: . .
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 . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 05 December 2021; Ref: scu.180707