The Gazette 1979

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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