Section 134, The Companies Act, 2009

(1) Subject to this section– (a) where a person is acquiring or is proposing to acquire shares in a company, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place; and (b) where a person has acquired shares in a company and any liability has been incurred by that or any other person for the purpose of that acquisition, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred. (2) Nothing in subsection (1) shall be taken to prohibit– (a) the lending of money by the company in the ordinary course of its business, where the lending of money is part of the ordinary business of a company; (b) the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of or subscription for, fully-paid shares in the company or its holding company, being a purchase of subscription by trustees of or for shares to be held by or for the benefit of employees of the company, including any director holding a salaried employment or office in the (c) the making by a company of loans to persons, other than directors, bona fide in the employment of the company with a view to enabling those persons to purchase or subscribe for fully-paid shares in the company or its holding company, to be held by themselves by way of beneficial ownership. (d) a company from giving financial assistance for the acquisition of shares in it or its holding company if– ( i) the company’s principal purpose in giving that assistance is not to give it for the purpose of the acquisition if giving of the assistance for that purpose is but an incidental part of some larger purpose of the company; and (ii) the assistance is given in good faith in the interest of the company; (e) a company from giving financial assistance if– assistance by company for acquisition of its shares. 92 93 (i) the company’s principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in the company or its holding company, or the reduction or discharge of such liability is but an incidental part of some larger purpose (ii) the assistance is given in good faith; (f) a distribution of a company’s assets by way of dividend lawfully made or a distribution made in the course of the winding up of the (g) the allotment of bonus shares; (h) anything done in pursuance of an order of the court under section 478 in relation to the power of a company to compromise with its creditors and members; (i) the provision of financial assistance by a company or any of its subsidiaries for the purposes of or in connection with anything done by the company for the purpose of enabling or facilitating transactions in shares in the company between and involving the acquisition of beneficial ownership of those shares by any of the following persons:- (i) the bona fide employees or former employees of that company or of another company in the same group; or (ii) the wives, husbands, widows, widowers, children or step children under the age of 18 of such employees or former employees; (j) the making by a company of loans to persons other than directors, employed in good faith, by the company with a view to those persons to acquire fully paid shares in the company or its holding company to be held by them by way of beneficial ownership. (3) The aggregate amount of any outstanding loans made under paragraph (c) of subsection (2) shall be shown as a separate item in every balance sheet of the company. (4) If a company acts in contravention of this section, the company and every officer of the company who is in default shall be guilty of an offence and be liable to a fine not exceeding Le5,000,000. (5) In this section “financial assistance” means– (a) financial assistance given by way of– (i) a gift, guarantee, security or indemnity other than an indemnity in respect of the indemnifier’s own neglect or default or by way of release or waiver; (ii) a loan or any other agreement under which any of the obligations of the person giving the assistance are to be fulfilled at a time when, in accordance with the agreement, remains unfulfilled, or by way of the novation of or assignment of rights arising under, a loan or such other agreement; or (b) any other financial assistance given by a company the net assets of which are thereby reduced to a material extent or which has no net assets. 94 95