p. 1277. Capital and capital maintenance
- Lee RoachLee RoachSenior Lecturer in Law, School of Law, University of Portsmouth
Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the two principal types of capital that companies acquire: share capital (capital obtained by selling shares) and debt capital (capital borrowed from others). Having obtained share capital through the selling of shares, the law requires that the company ‘maintain’ that capital by not distributing it in unauthorized ways, notably by prohibiting companies from returning capital to the shareholders prior to liquidation.