Capital Maintenance Rules
/ˈkæpɪtl məɪnˈteɪnəns rulz/
Definitions
- (n.) Legal principles ensuring a company does not reduce its capital below the level necessary to protect creditors.
Capital maintenance rules prevent shareholders from approving distributions that would diminish the company's capital unlawfully.
Forms
- capital maintenance rules
- capital maintenance rule
Related terms
See also
Commentary
Capital maintenance rules are central in corporate law to safeguard creditors by restricting how and when a company can reduce its capital; drafters should clearly specify applicable jurisdiction to address variations.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.