Capital maintance

Question 1

PLC v Private distribution

Answer 1

Private distribution is profit and loss. PLC is profit and loss minus non-distributable reserve

Question 2

Private company statement of solvency

Answer 2

Avoid court by submitting statement of solvency 15 days in advance of special resolution

Auditors must report on directors’ statement
Notice in national newspapers to all creditors within one week and notice in London Gazette

Question 3

Define treasury shares

Answer 3

If a plc buys back its own shares out of distributable reserved the shares are called treasury (statement of financial position)