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.
