Maintenance of Capital

Abstract

The principal concern of the law in this area is that the company should get full value for the shares it issues and that having received the money, that money should be kept within the company. Because the members of a company are in control of it, they could make the company transfer all its assets to them. In particular, therefore, money should not be returned to the members of the company, leaving the creditors with an empty shell to rely on when their bills are due to be paid. In this area the original common law rules have, to a considerable extent, been overtaken by statutory rules, many of them introduced by the Companies Acts 1980 and 1981 as a direct result of the European Community’s company law harmonisation programme. These rules are now part of the Companies Act 1985 which consolidated a number of previous Companies Acts.