country
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Principle Of Capital The Maintenance

tag 0 Download3 Pages 613 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Question:

How Do To Principle of Capital the Maintenance?

 

Answer:

Introducation

The principle of Capital maintenance postulates that a firm must receive proper compensation for its shares and must not repay it to the shareholder except under exceptional situations. Profoundly, this doctrine was first developed in the mid-19th Century in the United Kingdom (Kaplan, n.d.). Today, this doctrine has become less relevant in the contemporary business world. Most companies have a relatively small share capital and consider the capital maintenance regulations as unduly complicated. Others argue the rules of the principle have been overtaken by their exceptions. As a result, various countries such as Singapore, Australia, and the UK, and have restructured their capital maintenance guidelines over the past years to suit their specific needs.

In Trevor v Whitworth, a firm purchased most of its own shares. During its termination, one member applied for the balance of funds that the company owed him after the purchase. The court ruled that he should be compensated (Islam, 2013). Contrariwise, The House of Lords argued that the purchase was void, declaring that the business cannot buy its own shares despite the fact that there was a provision for that in the company’s memorandum. It also held that there could be no refund of funds to the shareholders other than on an appropriate reduction of capital authorized by the court. Thus, this case law applied the rule that stipulates that on the liquidation of a firm, members can retrieve their money only after all creditors have been reimbursed.

Benefits of the doctrine

Fundamentally, the benefits of the doctrine lie in the fact that it sought to safeguard the interests of creditors. In addition, it aimed at ensuring the lawful utilization of the assets of a business. Markedly, this principle has developed through a sequence of judicial interpretations in company case law. For instance, in the Flitcrofts Case, Jessel M. R. incidentally stated some aspects of this rule (Islam, 2013). First, the creditors have a right to ensure that the funds of a business are not used improperly. It also highlighted the fact shareholders should not be refunded their capital secretly. Here, the case was argued on the basis of the rules of capital reduction and company distributions.

 

Exceptions to the doctrine

It is imperative to note that there are certain exceptions to the doctrine of maintenance of capital. In Bangladesh, the rule on the reduction of capital proposes that a firm that is limited by shares does not possess the right to purchase its own shares or those of a public firm unless the consequent reduction is effected and sanctioned as per the requirements set out in sections 59 to 70. With regards to the purchase of shares, a company limited by shares cannot purchase its own shares except if it follows appropriate measures as outlined under Companies Act of 1994 (Hannigan, 2012). Likewise, in England, exceptions have been made pertaining to the reduction of share capital. The CA 2008 allows private companies to condense their capital through a special resolution reinforced by a statement of creditworthiness issued by all the managers.

 

Reference List

Capital maintenance. Kaplan Financial Knowledge Bank, [online]. Available at <https://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Capital%20maintenance.aspx> [Accessed 21 May 2017].

Chapter 3: Capital maintenance. Cr.gov, [online]. Available at < https://www.cr.gov.hk/en/publications/docs/062008_ch3-e.pdf > [Accessed 21 May 2017].

Hannigan, B., 2012. The doctrine of capital maintenance. Oxford Index, [online] (Last updated June 2014). Available at <https://oxfordindex.oup.com/view/10.1093/he/9780199608027.003.0020> [Accessed 21 May 2017].

Islam, S., 2013. The Doctrine of Capital Maintenance and its Statutory Developments: An Analysis. The Northern University Journal of Law, 4, pp. 47-55.

OR

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). Principle Of Capital The Maintenance. Retrieved from https://myassignmenthelp.com/free-samples/principle-of-capital-the-maintenance.

"Principle Of Capital The Maintenance." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/principle-of-capital-the-maintenance.

My Assignment Help (2018) Principle Of Capital The Maintenance [Online]. Available from: https://myassignmenthelp.com/free-samples/principle-of-capital-the-maintenance
[Accessed 30 March 2020].

My Assignment Help. 'Principle Of Capital The Maintenance' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/principle-of-capital-the-maintenance> accessed 30 March 2020.

My Assignment Help. Principle Of Capital The Maintenance [Internet]. My Assignment Help. 2018 [cited 30 March 2020]. Available from: https://myassignmenthelp.com/free-samples/principle-of-capital-the-maintenance.


MyAssignmenthelp.com has become one of the leading assignment help provider in New York City and Boston. We provide top class auditing assignment help. Not only auditing, but we also cover more than 100 subjects and our writers deal with all types of assignments with utmost expertise. To make writing process faster and accurate, we have segmented our assignment experts' teams as per their expertise on writing different types of assignments. We guaranteed that students who buy our assignment online get solutions worth their investment.

Latest Business Law Samples

ADSMWS608 Conduct A Marine Warranty Survey

Download : 0 | Pages : 17

Answer: Activity 1 The fundamental ingredients of an insurance contract include the following: the offer and acceptance between the assured and the insurer, presence of an insurable interest, utmost good faith, the immediate and the proximate causes are under the insurance contract. Furthermore, the methods of subrogation, indemnity and contribution are under the elementary principle of an insurance. It also includes the key idea of having ...

Read More arrow

MBA402 Governance Ethics And Sustainability 4

Download : 0 | Pages : 10

Answer: Introduction  Internal competition, decentralization and several elements increase the risk of the company; risk exposure calculator calculates the risk of the company by considering the pressure points related with the performance, information management and growth of the company  (Forouzanfar & et al. 2015). The present study is related with the analysis of risk of the company named as Property Millionaire. The company...

Read More arrow

ACC03043 Corporate Governance

Download : 0 | Pages : 10

Answer: Report To Chairperson Board of Directors From: Jane White, Corporate Governance Consultant Date: 22 January 2019 Subject: Cybersecurity policy of the company In the world full of technology, every organization is diverting it is focused on the use of technology. The reason behind the same is the infinite advantages that technology adds to the overall value of the company. The use of the internet and other technological innovatio...

Read More arrow

LAW1702 Business Law And Negligence System

Download : 0 | Pages : 3
  • Course Code: LAW1702
  • University: Algonquin College
  • Country: Canada

Answer: Introduction A teenage girl, Abigail Sataur from Ontario has sued Starbucks claiming that the company and its employees have failed to take reasonable care to ensure her safety. It has also been held by the plaintiff that the company has failed to take measures to prevent the injury, which was foreseeable. The plaintiff claimed general and special damages of $1 million from the defendant (Adriano, 2019). In such case, the court in ge...

Read More arrow

CGRM4000 Corporate Governance Sustainability And Ethics

Download : 0 | Pages : 10

Answer: Introduction The code of conduct refers to the set of the rules defining the social standards, spiritual rules and liabilities of, and or suitable exercises for the people. The code of conduct which is written for the company’s employees, secures the business and provides the notification to the workers in respect of expectation of the employees. In the following parts, the code of conduct of Wesfarmers limited is discussed. Wes...

Read More arrow
Next
watch

Save Time & improve Grades

Just share your requirements and get customized solutions on time.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,236,324

Orders

4.9/5

Overall Rating

5,066

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

647 Order Completed

98% Response Time

Adlina Han

Masters in Marketing with Specialization in Branding

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1592 Order Completed

96% Response Time

Jane Sima

Ph.D in Psychology with Specialization in Industrial-Organizational Psychology

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

234 Order Completed

100% Response Time

Samantha Ji

PhD in Chemistry with Specialization in Organic

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

798 Order Completed

97% Response Time

Benjamin Blakeman

MSc in Medical Technology

London, United Kingdom

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

Awesome write up for my assignment!!! Worth the money paid!!! Will come back .....

flag

User Id: 372486 - 30 Mar 2020

Australia

student rating student rating student rating student rating student rating

I really appreciate how the editor understood what I really meant to say thus making me feel more confident in submitting my work. I am an extremely happy customer. I will definitely sen un update on my grade.

flag

User Id: 393526 - 30 Mar 2020

Australia

student rating student rating student rating student rating student rating

Excellent work. We got total of 68 marks and we are very satisfied with the score. We gave this assignment near to deadline which is 2 days before due date. The assignment was about 4000 words and they did it well and gave it before 8 hours of submis...

flag

User Id: 393410 - 30 Mar 2020

Australia

student rating student rating student rating student rating student rating

I can\'t complain, speedy service and got the assignment before the deadline and got full mark

flag

User Id: 331157 - 30 Mar 2020

Australia

student rating student rating student rating student rating student rating
callback request mobile
Have any Query?