Abstract
This dissertation examines the regulation of financial assistance for the acquisition of shares by companies in South Africa, Nigeria, and the United Kingdom, with a particular focus on preventing the misapplication of corporate resources and strengthening director liability. Financial assistance for the acquisition of shares presents significant risks relating to asset depletion, creditor prejudice, and erosion of shareholder value.
In South Africa, section 44 of the Companies Act 71 of 2008 imposes controls, including shareholder approval, compliance with the company’s memorandum of incorporation, and the solvency and liquidity test, which introduces both objective and subjective elements for assessing financial soundness. Nigeria’s Companies and Allied Matters Act 2020 under section 183 combines prohibitions and exceptions on financial assistance for share acquisitions. In the United Kingdom Companies Act 2006, prohibitions on financial assistance remain only for public companies. The provisions pertaining to financial assistance for the acquisition of shares in each jurisdiction also provide for liability where there are contraventions. Across all three jurisdictions, the legal frameworks seek to balance legitimate commercial transactions with robust mechanisms to deter abuse and promote responsible governance.
The comparative analysis demonstrates increasing global convergence toward stronger accountability, though gaps remain particularly in South Africa and Nigeria due to existing enforcement mechanisms in place.