One of the most publicised aspects of the new Companies Act has
been the abolition of the prohibition on financial assistance
contained in Section 151 of the Companies Act 85.
Sections 151 to 153 and 155 to 158 of the 85 Act were repealed
on 1 October 2008 in relation to private companies. The repeal
applies in relation to financial assistance given on or after 1
October 2008 even if the shares in question were acquired and the
relevant liability incurred prior to 1 October 2008. Chapter 2 of
Part 18 of the 2006 Act contains the provisions regarding financial
assistance, which are contained in Section 677 to 683 of the Act,
which will be brought into force in October 2009.
Although financial assistance in its most common forms will no
longer be prohibited for private companies, there are still
situations in which the validity of transactions and the way they
are structured under more general rules of law, requires
review.
