Maintenance Of Capital Doctrine Business †Myassignmenthelp.Com

Question: How to the Maintenance of Capital Doctrine Business? Answer: The maintenance of capital doctrine is one of the important ethics in corporate law which control the company how they receive a proper consideration of the share. It is also make sure how much capital of share amount should deliver or distribute among the shareholders. The company must hold the capital of the share amount for the security and safety of the creditors (Knapp 2013). In such matter, the court always ensure that how company use the capital amount in business. The amount must uses in the legal purpose for the business. The famous cases are Trevor v Whitworth (1887) and Flitcrofts related to the doctrine of capital share amount. The house of lord had described in both of the cases that company have no rights to buy their own share for own benefits. The shareholders have the only right to buy the company share. When the company tried to buy the shares the share amount decrease the dividend amounts. Without the order of the court, the members of the company will not have capital deduction in the basic capital amount. The dividend amounts always distributed as per the capital amount of shares of the company (Arnold 2016). The Company Act 2006 states the doctrine of share capitals. The Act describes the facts of dividend payments, decrease the amount of companys share capitals, purchasing of shares and collecting of the shares under sections 17, 18 and 19 of the Act. In Australia, the Capital Maintenance doctrine has established in Australian corporate law under section 256A, 256C of the Corporations Act 2001. The doctrines are applying to protect the share capital of the company (Islam 2015). The various sections of the Corporation Act 2001 defines how a capital In the sec 256C of the Corporation Act stated that the capital amount of share profit of the company must be decrease when the shareholder approved the capital amount (Tomasic). In 256B of the Corporation Act described the exceptions of doctrines where company may decrease the share capital and the sec 257A give the right to the company to buy its own shares but there are some terms and conditions applied. Reference Arnold, A. J. "Capital reduction case law decisions and the development of the capital maintenance doctrine in late-nineteenth-century England."Accounting and Business Research(2016): 1-19. Islam, Md Saidul. "The Doctrine of Capital Maintenance and its Statutory Developments: An Analysis."Northern University Journal of Law4 (2015): 47-55. Knapp, Jeffrey. "A Reconsideration of Consolidation Accounting Requirements and Pre?acquisition Dividends."Australian Accounting Review23.3 (2013): 190-207. Tomasic, Roman. "The Rise and Fall of the Capital Maintenance Doctrine in Australian Corporate Law." (2015). Reference