Financial Assistance Prohibition in Stock Corporation Law – Merely an Anti-Avoidance Rule or an Independent Meaning in the System of Capital Maintenance?

The author critically discusses the position of the Slovenian domestic law theory and part of the case law that the purpose of the financial assistance prohibition provided by Articles 248(1) and 248(2) of the Slovenian Companies Act (ZGD-1) is to prevent the avoidance of restrictions concerning the acquisition of own shares. The author argues that the prohibition against financial assistance has an independent meaning in the system of rules on company’s capital maintenance, and that it is intended to protect company’s assets against specific risks associated with financial assistance operations for the acquisition of its shares. Therefore, according to the author, the provisions on financial assistance prohibition should be excluded from Article 248 of the Companies Act, which, in the framework of the rules on own shares, regulates the transactions of avoidance, and with that a separate article should be drafted.

Keywords: public limited company, rules on capital maintenance, own shares, transactions of avoidance, financial assistance.