power and capacity to provide financial assistance

power and capacity to provide financial assistance

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We have a client that is buying a property - the solicitor has asked us to confiorm the following 

"The Accountant needs to confirm that the Company has the power and capacity to provide financial assistance under its Memorandum and Articles and that the provision of the funds is not in contravention of the Companies Act 2006."

I have never seen such a request before 

is this common?

is it likely that the issue is related to the quite recently flagged up issue that some comapnies may have with their articles of association? 

 

 

 

Replies (3)

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By Roland195
02nd Feb 2023 13:44

Aside from anything else isn't the interpretation of a company's mem & arts and the CA 2006 not something the solicitor is more qualified to comment on?

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By Leywood
02nd Feb 2023 13:53

Quite.

Something I’m sure most solicitors have been involved with in such deals in the past as part of DD.

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By rmillaree
02nd Feb 2023 13:55

Yep

I have spoken to our company law specialists and they agreed - as this company was incorporated in 2012 they are perplexed as to why te question is evenm being asked as its known to be "a new company"

I had originally chucked the qeustion back with my details (so i could tell them that when they called me) and the issue was just spat back at our client for us to answer. Prcaticably speaking it sesms likely this person (at the solicitors) asking the question should be asking it internally rather than externally.

Hey ho.

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