Corporate Capital and Restrictions upon Dividends under Modern Corporation Laws

Abstract

MUCH progress has been made in recent years toward more scientifically drafted corporation laws which aim to give efficiency and scope to the management and at the same time to impose reasonable safeguards against corporate abuses. New corporation acts have recently been adopted in California,

Should Creditors Rely on the Solvency and Liquidity Threshold for Protection? A South African Case Study

“…52 It is this fund that the rules of legal capital serve to protect by prohibiting the return of the capital contained therein to shareholders, thus ensuring that this amount is "reserved for business purposes and for creditors". 53 Capital in excess of the amount constituting the "corporate reservoir of [net] assets" 54 in the capital fund (ie capital surplus) would not be subject to the same prohibitions and would therefore be distributable without impairing the full capital fund.…”

Corporations: Liquidating Dividends by Wasting Asset Corporations in California

“…What are the reasons which have given rise to the adoption of the rule excepting wasting asset corporations from considering depletion in determining surplus available for dividends? The exact policy supporting the rule has never been clearly stated, 31 which in itself is indicative of itg unsoundness. The justification for the doctrine, viewed from the aspect of business practice, is said to lie in the nature of wasting asset corporations.…”