Section 78 — Companies Act 1993: Special financial assistance

78 Special financial assistance (1) Financial assistance may be given under section 76(1)(b) of this Act only if the Board has previously resolved— (a) That giving the assistance in question is of benefit to those shareholders not receiving the assistance; and (b) That the terms and conditions under which the assistance is given are fair and reasonable to those shareholders not receiving the assistance. (2) The resolution must set out in full the reasons for the directors' conclusions. (3) The directors who vote in favour of a resolution required by subsection (1) of this section must sign a certificate as to the matters set out in that subsection. (4) A company must not give financial assistance under section 76(1)(b) of this Act if, after the passing of a resolution under subsection (1) of this section and before the financial assistance is given, the board ceases to be satisfied that— (a) The giving of the financial assistance is of benefit to those shareholders not receiving the assistance; or (b) The terms and conditions under which the assistance is given are fair and reasonable to those shareholders not receiving it. (5) Before the financial assistance is given under section 76(1)(b) of this Act, the company must send to each shareholder a disclosure document that complies with section 79 of this Act. (6) The assistance may be given not less than 10 working days and not more than 12 months after the disclosure document has been sent to each shareholder. (7) A shareholder or the company may apply to the Court for an order restraining the proposed assistance being given on the ground that— (a) It is not in the best interests of the company and of benefit to those shareholders not receiving the assistance; or (b) The terms and conditions under which the assistance is to be given are not fair and reasonable to the company and to those shareholders not receiving the assistance. (8) Every director who fails to comply with subsection (3) of this section commits an offence and is liable on conviction to the penalty set out in section 373(1) of this Act. (9) If a company fails to comply with subsection (5) of this section,— (a) The company commits an offence and is liable on conviction to the penalty set out in section 373(1) of this Act; and (b) Every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(1) of this Act.