Abstract

This article explores the concept of financial assistance under the Companies Act, focusing on sections 44 and 45, which aim to prevent abuse of control and protect minority shareholders and creditors. It traces the historical rationale for these provisions, rooted in public policy concerns, and examines their evolution from strict prohibitions to a more permissive framework subject to solvency, liquidity, and fairness requirements. The article incorporates economic principles such as information asymmetry and moral hazard, analyses judicial interpretations including the impoverishment test, and highlights recent legislative developments such as the carve-out for subsidiaries. The article concludes that determining whether financial assistance has been provided is a substantive legal inquiry guided by commercial realities, legislative intent, and case law, with non-compliance rendering transactions void and exposing directors to personal liability.