In the News
Companies Act changes now deferred
The implementation of certain changes to company law, simplifying provisions for Private Companies have now been put back.
These included the “Purchase of Own Shares “provisions.
The statutory provisions relating to financial assistance for the purchase of the company’s own shares is to be abolished for PRIVATE companies who will be able to give financial assistance for the purchase of their own shares subject only to the restriction or prohibition in their Articles of Association.
The Companies Act 1985 currently prohibits a company from giving financial assistance for the purposes of an acquisition of its own shares or those of its holding company. This includes loans to a purchaser, the reduction or discharge of a liability incurred by a purchaser or the guaranteeing of funds lent to the purchaser and other similar arrangements. However, the 1985 Act provides a relaxation for private companies, sometimes referred to as the “whitewash” procedure.
These provisions have been repealed in the 2006 Act for PRIVATE companies, thereby considerably easing the burden and not inconsiderable cost of having to undergo the “whitewash” process.
The general prohibition on the giving of financial assistance by a public company is restated in Section 678 of the 2006 Act. The 2006 Act financial assistance provisions were to take effect from 1 October 2008 but have now been put back to 1 October 2009
For further information contact nicola@warings.co.uk
29th November 2007