Week 13 - Financial Assistance Flashcards
what are the two cases of financial assistance
- loan, guarantee, providing security for purpose of security subscription
- loans to directors for any purpose
what is excluded from general financial assistance?
lending money in the ordinary course of business
what is excluded from FA to directors?
- lending in ordinary business
- amount to defray a person’s expenses for removal at company’s request
- accountable advance to meet legal expenses relating to the company
what are the requirements for granting FA?
- special resolution not older than 2yrs, OR
- employee share scheme
- company must comply with MOI too
what are the safeguards used for FA?
- company must pass the S&L test, AND
- terms of FA must be fair and reasonable to the company
what will happens if there is non-compliance with the FA requirements?
- transaction will be void
- director liability as usual…
what is a fundamental transaction?
transaction which will have a significant impact on the company
what are some examples of fundamental transactions?
- disposing of a great part of company assets
- entering into scheme of arrangement
- entering into merger
what can be used to regulate fundamental transactions?
- procedural requirements
- minority protection
- takeover regulation panel
what are some procedural requirements?
quorum, notice requirements for SH meeting
what is meant by disposals of a greater part/all of a company’s assets?
more than 50% of:
- gross assets at FV
- business measured as going concern
what procedural requirements are needed for disposal?
- quorum, notice requirements for SH meeting
- written summary of disposal terms
what is needed for a merger?
- a written agreement
- an S&L test to all companies merging
what must included in the written agreement for a merger?
- terms and means of effecting the merger
- proposed MOI of the company to be formed
what is a scheme of arrangement?
any arrangement between the company its SH
when can scheme of arrangement NOT be used?
- if company is subject to business rescue proceedings
- if company is in process of liquidation
what are some examples of schemes of arrangement?
- consolidating shares of diff classes
- reacquiring >5% of a class of shares
- dividing securities into diff classes
- exchanging securities for others
what must be done for the SH during the scheme of arrangement?
they must get a report from an independent expert to give them more info about this complex transaction
what are the general requirements for the approval of a fundamental transaction?
- notice of the transaction
- special resolution
- possibly court approval
what must be included in the notice of a FT?
- prescribed info detailing nature of FT (MOI, expert report)
- alert SH of their right to approach if they dissent and appraisal rights
whose voting rights will NOT be considered in the vote in favour of the resolution?
the voting rights of the party acquiring the assets
when is court approval required for a FT?
- holders of at least 15% voting rights oppose, OR
- single SH approaches court to allege that the res is unfair or materially tainted by conflict of interest and would make the court set the transaction aside
what requirements must the single SH who approaches the court meet?
- good faith
- can sustain the costs of proceedings
which transactions are monitored by the Takeover Regulation Panel?
affected transactions involving regulated companies
what is a regulated company?
- public
- SOC
- private company who sold more than 10% of its shares in the last 2yrs
what is an affected transaction?
a fundamental transaction
