Companies Act 2006: financial assistance: the long-awaited relaxation of the rules for private companies came into effect on 1 October 2008
A number of provisions of the Companies Act 2006 (the 2006 Act) are now in force. There will then be one final implementation date, 1 October 2009.
The changes to be made this October include the repeal of the existing regime contained in the Companies Act 1985 (the 1985 Act) prohibiting a private company from giving financial assistance for the acquisition of its own shares or those of its holding company.
Under the 1985 Act regime the giving of financial assistance was a criminal offence for both the company and the directors, and the transaction constituting the assistance was potentially void. Assistance could be given legitimately if a complex, time consuming and expensive "whitewash" procedure was followed; this involved approval by shareholder resolution, and confirmation of solvency from not only the company’s directors but also its auditors. The statutory provisions were notable for being both draconian and opaque, so their repeal is to be greatly welcomed.
In May 2008, international law firm Hammonds became a limited liability partnership. Hammonds LLP and its affiliated undertakings has offices in Birmingham, Leeds, London and Manchester in the UK, and in Berlin, Brussels, Beijing, Hong Kong, Madrid, Munich and Paris.