The Whitewash Procedure and How We Support You
Many professional firms, such as legal, accounting, consulting, and advisory practices promote senior staff into equity positions. These transitions sometimes involve the incoming partner purchasing shares using external finance, sometimes backed by the firm through a loan guarantee or security arrangement.
When a professional firm is set up as a company (rather than as a partnership) and that assists with financing its own shares, it may be giving financial assistance under Section 260A of the Corporations Act 2001 (Cth). This triggers a strict compliance process designed to protect shareholders, creditors, and directors from legal risk.
To proceed compliantly, companies undertake the Whitewash Procedure, governed by Section 260B, which allows the financial assistance to be approved by shareholders and registered with ASIC before it takes effect.
Why this matters
Financial assistance often arises frequently in internal share transactions across industries such as:
- Law firms promoting senior lawyers to equity partnership
- Accounting practices onboarding new principals
- Consulting firms expanding ownership among leadership
These transitions often rely on bank finance, with firms providing support that amounts to financial assistance under the Act. To avoid unintended breaches or delays, compliance must be factored into the transaction timetable from the outset.
ASIC requirements you need to know
ASIC’s framework includes:
- Shareholder approval before financial assistance is provided
- Lodgment of required documentation via physical mail (not electronic) to ASIC
- A mandatory waiting period before assistance can take effect, typically 14 days after lodgment
- Coordination between board approvals, shareholder meetings, and settlement timing
How Patricia Holdings support your firm — Whitewash ASIC compliance services
We are an ASIC agent and are happy to assist with the Whitewash compliance process, and work alongside your legal and admin team where needed. Our support includes:
- Preparing ASIC forms and explanatory shareholder materials
- Working with your existing templates or supplying tailored documentation
- Coordinating meetings, statutory delays, and lodgment schedules
- Project managing the process to ensure deadlines are met and all components align
Whether your firm is promoting someone to partner, onboarding a new stakeholder, or implementing succession plans, we ensure your financial assistance arrangements are compliant, efficient, and fit for purpose. Please contact our team for more information on this service.
