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Title: Capital reduction case law decisions and the development of the capital maintenance doctrine in late-nineteenth-century England
Authors: Arnold, A. J.
First Published: 7-Dec-2016
Publisher: Taylor & Francis (Routledge)
Citation: Accounting and Business Research, 2017, 47(2), pp. 172-190
Abstract: Incorporation with limited liability enabled companies to ‘lock-in’ their financial capital’ and then invest in the long-term, highly specific investments on which the modern industrial economy would be based. The level of benefit varied from country to country, according to the way that the concept of capital lock-in, or maintenance, was defined in the legal systems concerned. In the UK, the concept was not well defined in early company legislation and challenges were raised through the courts during the late nineteenth century. Some of these, the ‘dividend cases’, have been quite widely considered in the literature but direct reductions of share capital, or capital reduction schemes, have received far less attention, even though they raised fundamental issues concerning long-term dividend positions, the accounting treatment of accumulated losses, depreciation and asset values and had important effects on the development of the capital maintenance doctrine and on shareholder class rights. The purpose of this paper is to question whether this literature adequately captures judicial influences on the development of the capital maintenance doctrine in England during the latter part of the nineteenth century, given the limited attention that has been paid to date to the leading capital reduction cases.
DOI Link: 10.1080/00014788.2016.1233388
ISSN: 0001-4788
eISSN: 2159-4260
Version: Post-print
Status: Peer-reviewed
Type: Journal Article
Rights: Copyright © 2016, Taylor & Francis (Routledge). Deposited with reference to the publisher’s open access archiving policy.
Description: The file associated with this record is under embargo until 18 months after publication, in accordance with the publisher's self-archiving policy. The full text may be available through the publisher links provided above.
Appears in Collections:Published Articles, School of Management

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