Companies may now finance the purchase of their own shares!
Before the Corporate Laws Amendment Act can into effect late last year, this was prohibited. The prohibition contained in section 38 is still there, but now provides for an exception.
A company may provide financial assistance for the purchase or subscription of its own shares or those of its holding company if:
Any financial assistance must be authorised by special resolution of the company.
A company may provide financial assistance for the purchase or subscription of its own shares or those of its holding company if:
- the board of directors of the company is satisfied that the company's assets will still exceed the companies liabilities; and
- the company will be able to pay its debts as they become due.
Any financial assistance must be authorised by special resolution of the company.
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