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GAZETTE
MARCH 1979
whether it can only provide money for the purchase of
shares by itself, to be later distributed, which is unlikely,
°r to trustees to purchase who may then retain or
distribute the shares.
Another moot point in view of the preceding discussion as
to the relationship between paragraphs (b) and (c) with
regard to loans, is whether the company under paragraph
(b) could lawfully and by way of a scheme provide monies by
way ofloans to trustees who would then purchase the shares.
This is mooted in view of the fact while paragraph (c) deals
with loans, it deals with the making of loans to persons, with
a view to enabling those persons to purchase shares in the
company, to be held by themselves as beneficial owners
thereof. It is however submitted that such a transaction
would
not
be allowed in view of the differences between the
meanings of the words "provision" and "loans". Also how
would the trustees repay the loans if they had given the
shares away?
But what about loans to trustees? As for assistance under
Paragraph (c) that has perhaps been dealt with above, save
only as to the question of the exclusion of directors of all
fypes. The making of loans to persons for their
own benefit,
ls
allowed generally, and the only reason for excluding
directors is the fear that they might well abuse their trust, and
thus prejudice the position of creditors and share-holders,
(authors italics). However, loans to trustees are probably
outside the scope of the exception.
As to what is to be made of all this and particularly in view
the many companies who desire to lend money to
directors to enable them to purchase company shares, it can
and ought to be said that for as long as the law remains as it
>s, then those companies ought to obey it, and make use of
the provisions of subsection (2) of Section 60, rather than,
attempt to strain the language of the statute.
Of course much of the above is subject to judicial
decision. Nonetheless, in view of the clear paths mapped out
by the legislature for the permitting of assistance, companies
ought to follow these paths rather than have recourse to
dubious construction.
Footnote: The Society has been advised that the author's view that the
phrase "provision of money" in paragraph (b) of sub-section
13 does not admit of a loan of money is not widely accepted in
Ireland, and many companies have in fact made loans under
the paragraph.
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