Restrictions on Financial Assistance for Share Acquisitions

Croatian law imposes significant restrictions on the ability of companies to provide financial assistance for the acquisition of their own shares, as well as those of companies that directly or indirectly own shares in them, or sister subsidiaries. In this article, we will explore these restrictions and what they mean for businesses operating in Croatia.

Restrictions on Financial Assistance

Advance Payments, Securities, and Loans

According to Croatian law, an agreement under which a company grants financial assistance to third parties in the form of advance payment, security, or loan for the acquisition of its own shares is invalid. This prohibition does not apply to:

• Credit and financial institutions
• Financial assistance for share acquisitions by employees or officers of the company

Restrictions on Control and Assets

Prohibition on Financial Assistance for Share Acquisitions in Related Companies

Croatian law prohibits companies from providing financial assistance for the acquisition of shares in other companies that are directly or indirectly controlled by the same shareholders. This restriction aims to prevent the concentration of control and assets within a group of companies.

Restrictions on Sister Subsidiaries

No Financial Assistance for Share Acquisitions

Sister subsidiaries may not receive financial assistance from their parent company for share acquisitions, as this would create an unfair competitive advantage.

Conclusion

In summary, Croatian law is restrictive when it comes to providing financial assistance for share acquisitions, with the aim of preventing the concentration of control and assets within a group of companies and ensuring fairness in corporate transactions. It is essential for businesses operating in Croatia to understand these restrictions to avoid any potential legal issues.

Key Takeaways

• Croatian law prohibits companies from providing financial assistance for the acquisition of their own shares
• The prohibition does not apply to credit and financial institutions, nor to financial assistance for share acquisitions by employees or officers of the company
• Companies are prohibited from providing financial assistance for the acquisition of shares in other companies that are directly or indirectly controlled by the same shareholders
• Sister subsidiaries may not receive financial assistance from their parent company for share acquisitions