Capital Doctrine in Commercial Law: History, Development, and Application in Australia
6 Pages673 Words449 Views
About This Document
This article discusses the capital doctrine in commercial law, also known as the capital maintenance doctrine, which requires companies to obtain proper consideration for shares and not repay it to members except in certain circumstances. It was developed in England in the Flitcroft Case to protect the interests of creditors and ensure lawful distribution of the assets of the company. The article also covers the application of the doctrine in Australia, where the approach is more liberal and makes the directors of the company personally liable. The article concludes by discussing the reduction of share capital and the protection of the company's capital.