Cap. 386 Art. 110Undertaking may notsubscribeforor acquire shares in its parent company or provide financialassistance forthepurchaseof, or subscription for, its own or its parent company’s shares.

(1) It shall not be lawful for an undertaking -

(a) to subscribe for, hold, acquire or otherwise deal in shares in a company which is its parent company; or

(b) to give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of an acquisition or subscription made or to be made by any person of or for any shares in the company or its parent company.

(2) The provisions of sub-article (1) shall not apply to transactions effected with a view to the acquisition of shares by or for the company’s employees or the employees of a group company:

Provided that such transactions shall not have the effect of reducing the net assets of the company below the amount specified in article 106(1)(e).

(3) Sub-article (1) shall not apply to the provision of financial assistance by an investment company with fixed share capital for the purpose of or in connection with the acquisition of its fully paid up shares by another undertaking: Provided that such provision of financial assistance may not have the effect of reducing the net assets of the company below the amount specified in article 106(1)(e).

(4) The provisions of sub-article (1)(b) shall not apply if the company granting the financial assistance is a private company and the following requirements are fulfilled:

(a) the Board of Directors has, after taking into account the financial position of the company and the obligations of the directors as set out in article 136A, resolved by the affirmative vote of a majority of all the directors forming the Board at the time of the particular resolution, to authorize the grant of financial assistance for a specific transaction;

(b) an extraordinary resolution has been passed affirming the resolution taken pursuant to paragraph (a); and

(c) a declaration in the prescribed form signed by two directors confirming that the requirements set out in paragraphs (a) and (b) have been satisfied is duly filed with the Registrar prior to the granting of the financial assistance, and the signature of one director shall suffice where the Board is composed of only one director.