What is the position under the Companies Act 2014 in relation to a parent being asked to provide a guarantee for the benefit of a subsidiary/to a subsidiary or vice versa for an amount outstanding?

S.243(1)(b) of Companies Act 2014 specifically addresses this issue.

Any guarantee provided by any company within the group for another company within the group is permitted (assuming the definition of a subsidiary company has been met as stated in S.7 CA 2014). The definition of a subsidiary is contained in S.7 CA 2014 and defines when a subsidiary relationship exists – a subsidiary includes instances where a golden share is held which gives the right to the holder to control the composition of the board). One exclusion is where a guarantee is provided in connection with the acquisition of a company’s own shares (i.e. where financial assistance is given for the purchase of a company’s own shares even if they are in a group). This is prohibited under Section 82 of CA 2014 unless it is approved by way of a summary approval procedure under Section 203 of Companies Act 2014.