562 20 Acquisition Finance
According to the wording of the Second Directive, the main restrictions apply
only where the company that provides the assistance (advances funds, makes
loans, or provides security) is the target company (the company whose shares are
acquired).^51
According to the wording of the Directive, the main restrictions can apply
whether or not the third party that receives the funds, loans, or security directly
from the company is the party that acquires the company’s shares. Restrictions can
thus apply to chain transactions. Article 23a can influence the interpretation of the
scope of the main restrictions.
In some cases,^52 Member States must “ensure through adequate safeguards”
that the transaction “does not conflict with the company’s best interests”. This is
the case where one of the parties to a transaction referred to in Article 23(1) (ac-
quisition of the company’s shares, funding, loan, security)^53 is a person referred to
in Article 23a (member of the company’s administrative or management body; the
company’s parent undertaking; member of the parent undertaking’s administrative
or management body; or an individual acting in his own name, but on behalf of
such a party).
This means that the main restrictions can cover at least the following types of
transactions:
- The company provides funding, a loan, or a security directly to the third party
that acquires shares of the company. - The company provides funding, a loan, or a security directly to one party in a
transaction that enables a third party to acquire shares of the company (chain
transaction). - In such a chain transaction, the scope of the main restrictions is limited in par-
ticular by the purpose of the company’s acts.^54 - In any case, where the purpose of the company’s acts is to provide financial as-
sistance for the purpose of the acquisition of its shares by a third party, the
main restrictions can cover: (a) acquisitions of the company’s shares where the
buyer is a party referred to in Article 23a; (b) acquisitions of the company’s
shares where the party receiving assistance directly from the company is a party
referred to in Article 23a; and (c) acquisitions of the company’s shares where
either the buyer or the party receiving assistance directly from the company is
an individual acting in his own name, but on behalf of a party referred to in Ar-
ticle 23a.^55
(^51) Article 23(1) of Directive 77/91/EEC (Second Company Law Directive).
(^52) Article 23a of Directive 77/91/EEC (Second Company Law Directive) inserted by Di-
rective 2006/68/EC.
(^53) Article 23a refers to “a transaction referred to in Article 23(1)”. Article 23(1) refers to
the acquisition of the company’s shares and restricted forms of financial assistance.
(^54) Article 23(1): “... with a view to the acquisition of its shares by a third party ...”
(^55) The use of intermediaries is restricted even by Articles 18(2) and 19(1) of Directive
77/91/EEC (Second Company Law Directive).