Corporate - Financial Assistance Update

The law on financial assistance has long been regarded as one of the most complex and uncertain areas of modern company law. This complexity has important practical implications for structuring transactions.

Two recent Court of Appeal decisions and one first instance case have highlighted the lack of certainty in this area and the potential pitfalls in three commonplace scenarios:

• the payment of fees by a target company;

• restructuring post-acquisition indebtedness; and

• operating the "whitewash" procedure under section 155 of the Companies Act.