Capital Maintenance Flashcards
What does ‘capital’ mean in company law?
Money raised by a company through the issuance of shares, not a gift, and must be returned only on winding up (after debts are paid).
What are the three ways a company can acquire capital?
Loan capital (borrowed funds)
Share capital (from shareholders)
Business profits (internally generated)
What is the purpose of capital maintenance rules?
To protect creditors and ensure that share capital remains available to meet liabilities.
What does Section 655(2)(a) CA 2014 state?
Members are only liable for any unpaid amount on their shares during winding-up; no extra contributions.
What’s the difference between authorised and issued share capital?
Authorised: Maximum capital a company can issue (per constitution)
Issued: Shares actually issued to shareholders
What is nominal value of a share?
The fixed value assigned to a share in the constitution, used to determine liability and ownership, not market value.
What is share premium capital?
The amount received above the nominal value of a share (e.g., €1 nominal sold for €3.25 → €2.25 premium).
What does Section 84 CA 2014 allow?
Allows reduction in share capital via Summary Approval Procedure or court order.
What is the Summary Approval Procedure (SAP)?
A director declaration + shareholder resolution process allowing restricted company activities that would otherwise require court approval.
Name 3 activities authorised by SAP (Section 200 CA 2014).
Financial assistance for share purchase
Reduction of share capital
Members’ voluntary winding-up
(others: loans to directors, mergers, capital reorganisation, pre-acquisition profits)
What must the SAP statutory declaration confirm?
That the company can meet debts/liabilities within 12 months post-transaction.
What are the consequences of a false SAP declaration?
Directors may be held personally liable for company debts (Section 210 CA 2014).
What type of resolution is required for capital variation?
Ordinary resolution (Section 83 CA 2014)
What’s the minimum capital for a PLC?
€25,000 (Section 1000 CA 2014)
How is a resolution passed at an AGM?
Ordinary: Simple majority
Special: 75% vote
(Files: G2 for ordinary, G1 for special)
Can LTDs avoid holding an AGM?
Yes, if all members sign a written resolution before the due date.
What’s the difference between paid-up and uncalled capital?
Paid-up: Already paid by shareholders
Uncalled: Not yet paid but owed if called
What is an Extraordinary General Meeting (EGM)?
Any general meeting that isn’t an AGM.
What’s required for a majority written special resolution?
> 75% of voting rights must sign. It takes effect 21 days after last signature unless waived.
Can single-member companies act without a meeting?
Yes. Sole member can pass resolutions alone (except for auditor removal).
