New Clause 186
Company Law Reform Bill [Lords]
1:45 pm
Conditional exceptions
‘(1) Neither section (Assistance for acquisition of shares in public company) nor section (Assistance by public company for acquisition of shares in its private holding company) prohibits a transaction to which this section applies—
(a) in the case of a private company, or
(b) in the case of a public company if—
(i) the company has net assets that are not reduced by the giving of the assistance, or
(ii) to the extent that those assets are so reduced, the assistance is provided out of distributable profits.
(2) The transactions to which this section applies are—
(a) the lending of money in the ordinary course of the company’s business;
(b) the provision by the company, in good faith in the interests of the company, of financial assistance for the purposes of an employees’share scheme;
(c) the provision of financial assistance by a company or any of its subsidiaries for the purposes of or in connection with anything done by the company, or a company in the same group, for the purpose of enabling or facilitating transactions in shares in the first-mentioned company between, and involving the acquisition of beneficial ownership of those share by—
(i) bona fide employees or former employees of that company or of another company in the same group, or
(ii) spouses or civil partners, widows, widowers or surviving civil partners, or minor children or step-children of any such employees or former employees;
(d) the making by a company of loans to persons (other than directors) employed in good faith by the company with a view to enabling those persons to acquire fully paid shares in the company or its holding company to be held by them by way of beneficial ownership.
(3) The references in this section to “net assets” are to the amount by which the aggregate of the company’s assets exceeds the aggregate of its liabilities.
(4) For this purpose—
(a) the amount of both assets and liabilities shall be taken to be as stated in the company’s accounting records immediately before the financial assistance is given, and
(b) “liabilities” includes any amount retained as reasonably necessary for the purpose of providing for a liability the nature of which is clearly defined and that is either likely to be incurred or certain to be incurred but uncertain as to amount or as to the date on which it will arise.
(5) For the purposes of subsection (2)(c) a company is in the same group as another company if it is a holding company or subsidiary of that company or a subsidiary of a holding company of that company.’.—[Margaret Hodge.]