Section 81: Restrictions on giving financial assistance

81. Restrictions on giving financial assistance (1) A company shall not give financial assistance directly or indirectly for the purpose of or in connection with the acquisition of its own shares, other than in accordance with this section. (2) A company may give financial assistance for the purpose of or in connection with the acquisition of its own shares if the Board has previously resolved that— (a) giving the assistance is in the interests of the company; C35 – 59 [Issue 1] Companies Act (b) the terms and conditions on which the assistance is given are fair and reasonable to the company and to any shareholders not receiving that assistance; and (c) immediately after giving the assistance, the company shall satisfy the solvency test. (3) Where the amount of any financial assistance approved under subsection (2) together with the amount of any other financial assistance which is still outstanding exceeds 10 per cent of the company’s stated capital, the company shall not give the assistance unless it first obtains from its auditor or, if it does not have an auditor, from a person qualified to act as its auditor, a certificate that— (a) the person has inquired into the state of affairs of the company; and (b) there is nothing to indicate that the opinion of the Board that the company shall, immediately after giving the assistance, satisfy the solvency test, is unreasonable in all the circumstances. (4) The amount of any financial assistance under this section shall not be a distribution for the purposes of sections 61 and 63. (5) For the purposes of this section, the term “financial assistance” includes giving a loan or guarantee, or the provision of security.