Please enable JavaScript.
Coggle requires JavaScript to display documents.
Financial Assistance to Acquire Shares, Brady v Brady [1989] AC 755 (HL)
…
-
Brady v Brady [1989] AC 755 (HL)
Two brothers were the directors and majority shareholders of a group of companies. They had an argument and the companies became deadlocked. It was decided that the business would be divided between the two brothers. This process was complex and involved one company providing another company in the group with financial assistance to acquire its shares. It was argued that this financial assistance was not prohibited because it was part of a larger purpose (the division of the business) and it was incidental to that purpose. The financial assistance did not fall within the exception and so was prohibited. As regards whether the assistance was given for the purpose of acquiring the shares, Lord Oliver stated that ‘it is important to distinguish between a purpose and the reason why a purpose is formed’.The reason for the assistance was to divide the business between the brothers, but the purpose of the assistance was indeed to provide financial assistance to acquire shares.As regards the assistance being for an incidental purpose, Lord Oliver went on to state that a ‘larger’ purpose is not the same as a ‘more important’ purpose. The assistance was ‘not a mere incident of the scheme devised to break the deadlock. It was the essence of the scheme itself and the object which the scheme set out to achieve.’ The financial assistance was not an incidental part of a larger purpose.