Rendering (Once More) the Financial Assistance Regime More Flexible

Abstract

Directive 2006/68/EC eliminated the ban on financial assistance imposed by article 23 of Directive 77/91/EEC. The new formulation of article 23 allows Member States to authorize public limited liability companies to undertake financial assistance transactions, provided that they provide adequate safeguards to the (minority) shareholders and to third parties. Various Member States have not exercised this option and many authors have criticised the text of article 23 of the second Directive. The conditions set forth in article 23 aim to protect minority rights and creditor rights are considered excessively rigid and create an obstacle to the effective simplification of the regulations governing financial assistance. This article suggests possible modifications to article 23 of the second directive which could render the financial assistance regime more flexible without prejudicing the interests of both shareholders and creditors. This compromise solution ensures an adequate balance between flexibility and certainty and appears preferable to the proposed elimination of all financial assistance regulation.