§ Mr. Hanleyasked the Secretary of State for Trade and Industry if he will introduce legislation to restrict the practice of a company using its shareholders' funds to provide financial assistance, directly or indirectly, to another company to purchase its own shares in a takeover bid; what representations he has received on this subject; and if he will make a statement.
§ Mr. HowardSection 151 of the Companies Act 1985 already prohibits companies from giving financial assistance directly or indirectly for the acquisition of its own shares. Financial assistance is defined in section 152. This general prohibition is subject to various exemptions listed in section 153. I have received two recent representations about the operation of these provisions which I am considering, but ultimately their interpretation is a matter for the court.