Share Capital

Can a company provide financial assistance to purchase its own shares?

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Can a company provide financial assistance to purchase its own shares?

Under S. 67 of the Companies Act, a company is prohibited to provide any financial assistance for the purpose of a purchase or subscription of any of its own shares, except in the following cases:-

1) Where the lending of money is part of the ordinary business of a company;

2) For a scheme which provides for the purchase or subscription of its shares by trustee who are holding the shares for the benefit of employees (including salaried directors) of the company or a subsidiary of the company; or

3) Under an employee share financing scheme with a view to enabling these employees (other than directors) to purchase fully paid shares in the company or its holding company.

Or if the company is a public listed company, then it may able to provide financial assistance to purchase its own under S67A of the Companies Act.

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