ACCA LW · Chapter 9 · Question 8 of 11
Under the Companies Act 2006, which of the following is prohibited?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) A public company giving financial assistance for the purchase of its own shares, subject to specified exceptions
Explanation
Section 678 prohibits a public company (and its subsidiaries) from giving financial assistance for the acquisition of its own shares, subject to exceptions such as where the principal purpose is not the acquisition. The general prohibition for private companies was abolished by the 2006 Act. Issuing shares at a premium and paying dividends from realised profits are lawful.
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