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Notes on intra-group guarantees and intra-group loans

6 June 2018

These notes have been prompted by a paper produced by the Institute of Chartered Accounts in England and Wales and the Institute of Chartered Accountants of Scotland: 'Guidance on Realised and Distributed Profits under the Companies Act 2006 (Tech 02/17 BL)'. They are concerned with the following questions:

1. If an English company, which is a member of a group of companies, gives a guarantee to a creditor of its parent company or of a fellow subsidiary, can that guarantee constitute a distribution of assets to its members?

2. If an English company, which is a member of a group of companies, makes an on-demand loan to its parent company or to a fellow subsidiary, can that loan constitute a distribution of assets to its members?

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