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Cover Card & James' Business Law

21. Shares and capital maintenance  

This chapter examines the nature of shares and the share capital of companies, and the provisions for the maintenance of capital as they apply to companies with a share capital. It begins by defining what a share is before moving on to discuss the classifications of share capital. The process by which shares are created is examined in detail, including an examination of the allotment and issuing of shares, the minimum capital requirement, and the company’s ability to issue different classes of share. The chapter then discusses the capital maintenance regime—a series of rules designed to protect the company’s creditors by preventing capital from being returned to shareholders (including the restructuring of share capital, and the rules relating to distribution of profits).


Cover Business Law

16. Duties Relating to Corporation Finance and Capital  

This chapter discusses the details of the various obligations on companies that wish to issue and allot shares, provide debentures and charges over the company’s assets, and provide guidance on the maintenance of the company’s finances. It continues from the discussion of the administration of the company to consider the broad issue of corporate governance and identifies how a company may raise capital, while also considering the obligations placed on the directors to protect and maintain the capital of the company for its members. To appreciate the effects of the Companies Act (CA) 2006 on companies, it is important to understand the rules regarding the issuing of shares and granting of debentures to protect the company and the creditors from abuse, and how dividends are to be agreed upon and provided to shareholders.