capital maintenance

Question 1

lawful distribution

Answer 1

must be made out of profits available for that purpose (830(2))

Question 2

can distributions be made out of capital?

Answer 2

NO.

Question 3

Bairstow

Answer 3

contravention will render the distribution unlawful eg improperly prepared accounts

Question 4

Re Exchange Banking Company

Answer 4

in the event of unlawful distribution, Ds will be jointly & severally liable for the full amount as they are Ts of company assets

Question 5

elements for disguised distributions

Answer 5

1) undervalue

2) motive

Question 6

test for disguised distributions

Answer 6

Progress Property
Look at transaction objectively but not relentlessly objectively (with degree of reason).
Court to inquire into true purpose & substace of the transaction

Question 7

Aveling Barford

Answer 7

sale of property at a considerable undervalue to another entity controlled by the company’s sole beneficial SH = unlawful distribution