We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
Comparative Company Law from PART II - The corporation and its capital
Required reading
EU: Second Company Law Directive, arts. 15, 16
D: AktG, §§ 57–62, 66, 119(1) no. 2, 150, 158, 174, 254; HGB, § 272; GmbHG, § 30; BGB, §§ 134, 985
UK: CA 2006, secs. 829–831, 836–846; SI 2008 No. 3229, Regs. 70–77
US: DGCL, §§ 154, 170, 173, 174, 244; Uniform Fraudulent Transfers Act, §§ 1–5
Maintaining the share capital
In the preceding chapters, we examined the rules designed to constitute the company's share capital and ensure that the funds paid or assets contributed for this purpose have the promised value. Here we will discuss capital maintenance rules that seek to protect unsecured creditors by preventing shareholders from paying those corporate assets to which such creditors look to for repayment out to themselves. Legal limits on dividends go to the heart of a company's value. Although in theory the payment of dividends should not have a significant impact on share price because capital gains serve to compensate for an absence of such distributions, in practice dividend payments are indeed crucial to share price. This is particularly true for corporate shareholders, which some jurisdictions tax more favorably for dividend than for capital gain income. Thus, shareholders have a strong interest in the distribution of dividends and creditors have an equally strong interest in not having the corporate capital of their debtor excessively depleted by such distributions.
To save this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.
