Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Financial assistance definition

What does Financial assistance mean? Financial assistance describes funding or other support a company gives to help someone acquire its shares (or those of its holding company), such as a loan, guarantee, security or indemnity, whether provided before, at the time of, or after the acquisition. The concept is used across corporate and banking practice and is framed broadly in statute. United Kingdom (England & Wales, Scotland and Northern Ireland): Under the Companies Act 2006, the historic prohibition was abolished for private companies. A statutory ban still applies where a public company (or its subsidiaries) gives financial assistance for the acquisition of shares in...

Financial assistance for share acquisitions under the Companies Act 2006: prohibitions, statutory exceptions, directors’ duties, capital maintenance, insolvency and enforcement

Published by a LexisNexis Banking & Finance expert

Practice notes

Certain companies are barred from giving financial assistance, whether directly or indirectly, to fund the purchase of their own shares or those of their holding company. These restrictions sit in Chapter 2 of section 677 of the Companies Act 2006 (CA 2006). This Practice Note sets out:

the circumstances in which the bans on financial assistance arise, and
additional legal rules that must be assessed where assistance is offered to a buyer of shares in the company providing it

The regime on financial assistance under the Companies Act 1985 (CA 1985) differed in material respects from the position now in force. This Practice Note addresses the current regime. For details of the pre‑CA 2006 position, see Practice Note: —fundamentals—How does the CA 2006 prohibition on the giving of financial assistance differ from that which existed under CA 1985?

Why prohibit financial assistance?

Within the CA 2006 framework, financial assistance means help furnished by a company to a person acquiring shares in that company, or in its holding company...

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Web page updated on 21/05/2026

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