Assist someone to acquire shares in your company
The company is helping pay for its own shares, and the law's default answer to that is no.Your transaction needs the company to help fund the purchase of its own shares. That might be a guarantee, a loan, or security given for the buyer’s borrowing. The Corporations Act starts from a prohibition on exactly that, and the whitewash is the procedure that lifts it. It has to be finished before the assistance is given, in the right order, or the assistance is unlawful and the directors carry it personally. We run the procedure so it is a scheduled step in your deal rather than the thing that undoes it.
A clearance in writing
You end with the document the next buyer's lawyer will ask to see.
Directors kept out of it
The declarations are drafted to the standard the Act requires, which is what protects the people signing.
Sequenced to your settlement
The procedure is finished before the assistance is given, rather than tidied up afterwards.
What is financial assistance, and what is a whitewash?
The Corporations Act generally prohibits a company from financially assisting a person to acquire shares in it, or in its holding company. Financial assistance is defined broadly. It covers loans, guarantees, security given for someone else’s borrowing, and other arrangements that materially prejudice the company or its creditors.
The whitewash is the exception. The company can give the assistance if its shareholders approve it by special resolution, the directors make the prescribed declarations, and notice is lodged with ASIC. The order matters as much as the content. The procedure has to be complete before the assistance is given, not tidied up afterwards.
Does my transaction need a whitewash?
It does if the company is giving financial assistance to someone acquiring its shares. The test is whether that assistance materially prejudices the company, its shareholders or its creditors. The common triggers are a company guaranteeing the buyer’s loan, lending to the buyer, or giving security for the buyer’s borrowing. Whether yours qualifies turns on the facts, which is the first thing worth settling.
What are the actual steps?
A special resolution of shareholders approving the assistance, declarations from the directors addressing what the Corporations Act requires, and lodgement with ASIC. The order is not optional. The procedure has to be complete before the assistance is given.
What if we skip it?
The assistance is unlawful. The company and its directors face civil and potentially criminal consequences. Directors can be personally liable even having acted in good faith, and the assistance itself may be void. That last part is the one that reaches the rest of the transaction.
How long does it take?
Usually two to four weeks, and most of that is waiting on shareholders and directors to sign rather than on us. Where a notice period applies it sets the floor. We give you the timeline at the start so it can sit inside your settlement date rather than beside it.
A whitewash done wrongly can void the deal that depends on it
Tell us the structure and who is funding what. We will tell you whether a whitewash is required, and how long it would take against your settlement date.
The procedure looks administrative until it is the reason the deal fails
Your transaction involves the company assisting the buyer, and somebody has told you an approval process has to happen first. The requirements are unfamiliar and the timeline is not generous. Getting the sequence wrong makes the assistance unlawful. That puts the directors personally on the hook, and can take the structure the whole deal rests on with it.
- We will tell you whether your transaction needs a whitewash at all.
- We will prepare the shareholder and board resolutions.
- We will draft the directors' declarations to the standard the Act requires.
- We will lodge the notices with ASIC in the correct sequence.
- We will confirm in writing when the assistance can lawfully be given.
The deal is agreed and the company has to approve something first
You are partway through a share sale, a management buyout, or bringing someone into the business. The structure has the company doing something to help the buyer pay: guaranteeing their loan, lending to them directly, or putting up security. Your accountant or the other side’s lawyers have said a whitewash is needed before any of that can happen. Nobody has told you what it involves or how long it takes, and settlement is already booked.
What's included in your financial assistance whitewash service
- Assessment of whether the prohibition applies to your structure.
- Shareholder and board resolutions prepared.
- Directors' declarations drafted and reviewed.
- ASIC lodgement in the required sequence.
- Written confirmation that the assistance may be given.
- A complete whitewash file for future due diligence.
What happens when the whitewash is skipped or botched?
The failures here are procedural, which is exactly why they get missed. A resolution passed by the wrong majority. A directors’ declaration that does not address what the Act requires it to address. A lodgement made after the assistance was given rather than before.
Any one of those makes the assistance unlawful, and the unlawfulness attaches to the step the rest of the transaction was built on. The directors who authorised it can be personally liable even where they acted in good faith and took advice on everything else. And the discovery usually comes later, during due diligence on the next transaction. The company is being sold, and a buyer’s lawyer asks to see the whitewash file. At that point it cannot be redone, because the assistance has already been given.
How we make it a scheduled step rather than a risk
We start with whether the procedure is required at all, because it is not always. Knowing that early is worth the call on its own. Where it applies, we tell you which shareholders have to approve, what the directors have to declare, and what ASIC needs to see.
We then draft the resolutions, the declarations and the lodgement material so they can be executed on your timetable rather than in a rush at the end. The sequence is set out in writing, because the order is what makes it valid. When it is done we confirm in writing that the assistance can lawfully be given, which is the document the next buyer’s lawyer will ask for.
How the whitewash runs
Three steps from an unapproved structure to assistance that can lawfully be given.Check if it applies
We work out whether your structure actually triggers the prohibition, because not every arrangement does.
Draft and resolve
We prepare the shareholder resolution, the directors' declarations and the lodgement material, ready to execute on your timetable.
Lodge and clear
We lodge with ASIC in the right order and confirm in writing that the assistance can now be given.
A whitewash that is finished before the money moves
Nobody budgets time for this. The whitewash surfaces late, usually because the other side’s lawyers raised it. By then the settlement date is fixed and everyone treats it as a form to fill in. It is not a form. It is the thing that decides whether a director is personally liable for a transaction they thought was ordinary.
We are ISO 9001 accredited, so the order of steps on a file like this is written down rather than remembered. That matters when validity depends on sequence rather than content.
Our great lawyer guarantee
Six principles we hold to, whatever you bring us and however long it takes.
Take the time
We listen carefully to understand what you want to achieve, then step you through the advice and the documents.
Share our knowledge
We pass on as much as we can, so you can make your own informed decisions.
Stick to our knitting
We only do what we are good at, so you never pay for our learning.
Work as one team
Someone is always available to answer your question or point you the right way.
Fair pricing
A fixed or capped quote for advice and documents, so you do not carry the price risk.
It is your show
We are in it for a front row seat to witness your success, not for our egos.
Get the whitewash done before settlement
Tell us the structure, who is funding the purchase, and when you need to settle. We will tell you whether a whitewash is required. And what it would take to finish it in time.
More on this area of law
Read more about financial assistance, share sales and company approvals.