What is a financial assistance?

The general rule contained in section 260A of the Corporations Act 2001 (Cth) (Act) is that a company may financially assist a person to acquire shares (or units) in the entity if the giving of assistance does not materially prejudice:

• the interests of the company or its shareholders;
• or the company’s ability to pay its creditors.

If a transaction is determined to be financial assistance, then shareholder approval and the requirements of section 260B must be complied with.

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