Simplification of European Company Law on Financial Assistance

Posted: 19 Apr 2005

See all articles by Eilis Ferran

Eilis Ferran

University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)


The European Commission has recently announced a proposal to relax the ban on financial assistance by providing a gateway procedure that companies could follow in order to sanitise the granting of financial assistance. This article is unimpressed by the proposal and suggests that adopting it is likely to be a largely pointless exercise. Barring truly exceptional circumstances, no company is ever likely to want to take advantage of the proposed gateway procedure because it is time-consuming, costly, runs the risk of transaction-disrupting minority shareholder actions and exposes directors to excessive personal risks.

Keywords: Company law, legal capital, financial assistance, second directive, reform

JEL Classification: K20

Suggested Citation

Ferran, Eilis, Simplification of European Company Law on Financial Assistance. Available at SSRN:

Eilis Ferran (Contact Author)

University of Cambridge - Faculty of Law ( email )

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European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
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