Brady v Brady
| Brady v Brady | |
|---|---|
 | |
| Court | House of Lords |
| Citation(s) | [1988] BCLC 579 |
| Keywords | |
| Share | |
Brady v Brady [1988] BCLC 579 is a UK company law case concerning the prohibition on financial assistance.
Facts
T. Brady & Sons Ltd and its subsidiaries went through restructuring after the two brothers that owned the majority of shares fell out and wished to divide the company’s assets. One part of the process involved paying financial assistance to reduce liability on the company buying some of the shares. The fact that it was financial assistance was accepted, but it was argued that this was not the main purpose, relying on what is now the CA 2006 section 678(4) exception.
Judgment
Lord Oliver held the requirement is the assistance is given in good faith and in the best interests of the company, a subjective standard. He rejected that a ‘larger’ purpose of freeing deadlock would suffice for almost anything, and so on this ground the exemption was not fulfilled.
| “ | The acquisition 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. | ” |