ABSTRACT
In this chapter we review the laws governing minimum share capital and the reduction of share capital. We examine the importance of share capital to creditors and we also examine the laws regulating other actions by which companies return money to
IN T
R O
D U
C T
IO N
shareholders, principally by distributions. Together with the shareholder last principle, these laws are often referred to as ‘capital maintenance’. We then look at the broader issue of how the law regulates gratuitous payments by a company to non-shareholders, including political donations. The final section of this chapter deals with the prohibition on a company giving financial assistance for the purchase of its own shares which is an extension to the prohibition on a company buying its own shares but is aimed at a different mischief from capital maintenance laws.
