Financial assistance in law refers to assistance given by a company for the purchase of its own shares or the shares of its holding companies. In many jurisdictions such assistance is prohibited or restricted by law. For example, all EU member states are required to restrict financial assistance by public companies up to the limit of the company's distributable reserves,[1] although some members go further, for example, Belgium, Bulgaria, France,[2] and The Netherlands[3] restrict financial assistance by all companies. Where such assistance is given in breach of applicable law it will render the relevant transaction void and may constitute a criminal offence.[4]
- ^ Recital 5 of the EU Directive 2006/68/EC of 6 September 2006 amending the Second Directive on Company Law and Article 23 of the Second Directive on Company Law
- ^ Article L. 225-216 of the French Commercial Code
- ^ Article 207c, Second Book of the Civil Code of the Netherlands
- ^ See for example section 151(3) of the Companies Act 1985 of the United Kingdom
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