62 / 516
numbered 2006/68/EEC
2
. As a result of this amendment, the European
Union member states are provided a gateway to financial assistance as
long as the conditions set forth in the Directive are satisfied. Pursuant
to this amendment, the advance payment, loan or security provision
transactions must be on an arm’s length basis; a report about the trans-
action must be prepared by the management body and submitted to the
company; the company shall approve this financial assistance transac-
tion with the votes cast of two thirds of shareholders; the assets of the
company shall not be less than the non-distributable reserves of the
company after the granted financial assistance. Besides, equal amount
of reserve shall be put aside and the benefits of the company shall be
protected.
The New TCC did not adopt these amendments. Nevertheless it
should be noted that the implementation of the amended Directive
within member states of the European Union is left at the discretion of
each member states, to either allow or prohibit financial assistance in
their national law. Therefore, the New TCC has opted to adopt a criti-
cized and inflexible system nevertheless the current text of article 380
does not constitute a violation of the
acquis communautaire
of the
European Union.
The Financial Assistance Prohibition and Consequences of its
Breach
The financial assistance transactions prohibited under article 380
of the New TCC are the provision of advance funding, loans or securi-
ty to third persons to acquire the target company shares. Any type of
transaction governing the provision of advance funding, loans or secu-
rity is deemed to fall within the scope of the prohibition.
Either granting interests directly to the third persons acquiring
company shares or providing financial assistance through indirect
means to such persons may fall within the scope of this article. Bearing
the costs of legal and financial due diligence, audit and consultation
received for the share purchase transaction, repayment of a facility
extended for the payment of the share price by using another facility
48
NEWSLETTER 2012
2
Directive 2006/68/EC of the European Parliament and of the Council dated 6 September 2006.