As an example of Whitewash, abc private companies want to be bought by XYZ. ABC could provide financial assistance to XYZ to provide sufficient capital to purchase its shares. Another form of whitewash resolution is a concept of corporate law in Hong Kong and Singapore. In this case, the Whitewash decision is a waiver of the rights of certain independent shareholders. A whitewash decision is a waiver of the right of these shareholders to obtain mandatory takeover by other shareholders. The dissolution of Whitewash is a European term used in the 1985 “Companies Act” which refers to a resolution that must be adopted before a target company in a takeover situation can provide financial assistance to the purchaser of the objective. A dissolution of Whitewash occurs when the directors of the target company must swear that the company will be able to repay its debts for a period of at least 12 months. Often, an accountant must then confirm the solvency of the company. If your company is considering financial assistance, it must receive financial support or, in other words, shareholder agreement. Therefore, you need to understand your obligations under the provisions of the Financial Assistance Act.
Whitewash`s resolution means that the buyer, via a solution, promises that the target company will be solvent for at least a year. The role of the statutory auditor is to ensure that this is financially possible. Once this has been done, the target company can place the responsibility on the company that assumes it. If the shareholders agree to a financial assistance transaction, the company has finally received “financial support”. This article explains what an unlisted company must do to obtain shareholder approval for a financial assistance transaction. If you are an unlisted company, you must complete these steps in order to obtain shareholder approval for financial support. In addition, it is important to note that your company`s by-law and shareholders` pact may have other requirements to meet. The 1985 Corporations Act and the dissolution of Whitewash are intended to ensure that the target entity remains solvent and does not seek to honour its commitments as soon as the acquisition is completed. Before this happens, the directors of Company ABC must pass a whitewash resolution. The resolution adopted by ABC would indicate that the business will remain viable for at least one year after the granting of the aid. An investor can turn to an executive for a Whitewash resolution. This waiver, if approved, would depend on the agreement of the shareholders.
In addition, the case shows the potentially unfortunate result of non-compliance with the financial aid provisions when the procedure for violating certain pre-emption rights provisions has been suspended from a company`s constitution because the proceedings against the defaulting shareholder were initiated and financed by the company itself (instead of the prized shareholders) in cases where the company could not demonstrate that it did not have a substantial inconvenience. , by providing financial assistance to its shareholders as a whole or to each shareholder (not just the shareholders in common). Once the merger has taken place, the company, if the shareholders approve the transaction, will have to file with ASIC: the High Court has confirmed that the “subsidies” must be of great economic importance and that there is no need for additional testing, for example. B if the company was “impoverished.” The financial assistance in this case was the opening and financing of legal proceedings against a shareholder in order to impose a pre-emption provision for the effect of other shareholders.