Capital Maintenance

The Department of Trade and Industry's Company Law Review recognized that an ideal solution to the complex issues raised by the current law on capital maintenance required reform at Community level. The Winter Report prepared by the High Level Group of Company Law Experts proposed a short term reform of a number of detailed aspects (allowing for example no par value shares) and a longer term reform allowing a replacement of the traditional rigid capital maintenance regime by an alternative commercially based solvency approach.

The Centre's Director, Professor Jonathan Rickford, and the Accounting Standards Board organized an interdisciplinary group of accountants, academics and practitioners who have analysed the current regime of capital maintenance and prepared a provisional report, Reforming Capital. This group was established to undertake a comparative study of the capital maintenance provisions of different jurisdictions and make a case for reform following the recommendation suggested by High Level Group of Company Law Experts. The Report covers the legal problems arising on current accounting standards, particularly, on stock options and pension funds deficits, and makes wider proposals for reform.

On 30 January 2004 the Company law Centre hosted a conference at the Institute entitled Reforming Capital Maintenance: New Accounting Standards and the case for Reform, where the Report served as basis for the discussion.

Project Report

Members of the Institute can access the full text of the report by clicking here.