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Company law and the whitewash procedure

  • 21-04-2011 10:46am
    #1
    Lockstep
    Registered Users, Registered Users 2 Posts: 9,031 ✭✭✭


    Anyone able to give a brief rundown of the Whitewash procedure (allowing a company to finance the purchasing its own shares)?

    Heard it mentioned a few times but would appreciate a quick rundown on it.


Comments

  • #2
    Lynnsie
    Registered Users, Registered Users 2 Posts: 217 ✭✭Lynnsie


    Its set out pretty clearly in Section 60 of the Companies Act 1963 http://http://www.irishstatutebook.ie/1963/en/act/pub/0033/sec0060.html
    Quick overview the company giving the financial assistance must hold a board meeting at which a statutory declaration is sworn before a commissioner for oaths/practicing solicitor by a majority of the directors. The declaration has to give details of the form of the financial assistance (i.e. is it a loan/guarantee etc.) and who it is to be given to. The declaration also has to state that the directors have made full inquiry into the affairs of the company and have formed the opinion that if the company gives the assistance, it will be able to pay its debts in full as they fall due. Its a criminal offence to make this declaration without having reasonable grounds for this opinion.

    Then a general meeting is held at which the shareholders pass a special resultion approving the assistance.

    A copy of the statutory declaration and the shareholders' resolution must be filed with the CRO within 21 days of the date on which the financial assistance is given.


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