There has been a lot of debate on the application of the Companies Act on inter company loans.

Section 45 is the section which, inter alia, deals with inter company loans. We must admit that the title of section 45 “Loans or other financial assistance to directors” is misleading as no reference is made to inter company loans in the title.

 

A firm of attorneys approached the Companies and Intellectual Property commission (“CIPC”) for an non binding opinion on the application of Section 45 of the Act on inter company loans (please see the link below).

Non Binding opinion by CIPC

Except for the title which is misleading the wording of section 45 was not amended or subject to any material changes  since the final Bill before amendments.

With regards to the “solvency and liquidity” regime, and to ensure solveny and liquidity it is important that inter company loans be properly approved however the practical implications of compliance is a challange to manage.