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21 July 2015
Another whitewash; Patently a problem; Partners split; Bookkeeping service
Another whitewash
Can a purchase of a trading company be made with its own financial assistance?
A husband and wife own all the issued share capital of a holding company which has a 100% owned trading subsidiary. This was established before the general prohibition of financial assistance by a trading company to the acquisition of its issued share capital. As a result a whitewash procedure was instigated. The subsidiary advanced the consideration to the holding company and then declared dividends to it. These were not paid and extinguished some of the original indebtedness – the process should be completed in the next year or two.
The husband and wife are working directors but their health is deteriorating and they want to sell their shares to an acquaintance. The trading subsidiary continues to be profitable.
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