Prohibition on Financing Acquisition of Shares in the Company

Along with defining the aforementioned [Use and Distribution of a Company Assets in General]⁠ criteria for permitted ways to distribute assets, the Companies Act explicitly prohibits use of company assets to finance acquisition of the company’s shares. According to the prohibition, a company may not grant monetary loans or other company assets to be used for the purpose of acquisition of the company’s or its parent company’s shares by the recipient of such funds or an affiliated party [Related Parties of a Company] ⁠of such person or entity.

The company is also prohibited from giving a guarantee for a loan taken out for the above-mentioned purpose. As an exception to this rule, the company may finance an acquisition of shares by an employee of the company or an affiliated company [Related Parties of a Company]⁠.

Provision of funds or guarantee in breach of these prohibitions may result in the consequences stipulated for unlawful distribution of company assets [Consequences of Unlawful Distribution of Assets]⁠.