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Section 446 of The Companies Act No. 17 of 2015: Certain transactions excepted from sections 442 and 443 conditionally

    

(1) This section applies to the following transactions—
(a) if the lending of money is part of the ordinary business of the company —the lending of money in the ordinary course of the company’s business;
(b) the provision by the company — in good faith in the interests of the company or its holding company, of financial assistance for the purposes of an employees’ share scheme;
(c) the provision of financial assistance by the company for the purposes or, or in connection with, anything done by the company (or another company in the same group) for the purpose of enabling or facilitating transactions in shares in the first-mentioned company or its holding company between, and involving the acquisition of beneficial ownership of those shares by—
(i) bona fide employees or former employees of that company (or another company in the same group); or
(ii) spouses, widows, widowers or surviving, or minor children or step-children of any such employees or former employees;
(d) the making by the company of loans to persons (other than directors) employed in good faith by the company with a view to enabling those persons to acquire fully paid shares in the company or its holding company to be held by them as beneficial owners.
(2) Sections 442 and 443 do not prohibit any of the transactions to which this section applies—
(a) if the company giving the assistance is a private company; or
(b) if the company giving the assistance is a public company and—
(i) the company has net assets that are not reduced by the giving of the assistance; or
(ii) to the extent that those assets are so reduced, the assistance is provided out of distributable profits.
(3) In this section, a reference to "net assets" is to the amount by which the aggregate of the company's assets exceeds the aggregate of its liabilities.
(4) For the purpose of subsection (3)—
(a) the amounts of both assets and liabilities are as stated in the company's accounting records immediately before the financial assistance is given; and
(b) "liabilities" includes any amount retained as reasonably necessary for the purpose of providing for a liability the nature of which is clearly defined and that is either likely to be incurred or certain to be incurred but uncertain as to amount or as to the date on which it will arise.
(5) For the purposes of subsection (1)(c), a company is in the same group as another company if it is a holding company or subsidiary of that company or a subsidiary of a holding company of that company.

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Disclaimer: This document is not to be taken as legal advise.

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