Principle of maintenance of capital

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The principle of maintenance of capital: that a company share capital should be maintained during the life of the company. This principle was first expressed by the House of Lords in 1887 in Trevor v Whitworth. The executors of Whitworth, a deceased shareholder in James Schofield & Son ltd, sold his shares in the company to it. The payment was to be in two installments. Before the payment of the second installment, the company went into liquidation. The executors claimed this sum from the company's liquidator, Trevor. Whilst the company's memorandum did not authorize it to purchase its own shares, its articles did. It was held that a company had no power to purchase its own shares even if its articles permitted such an acquisition.

Regarding the above statement and relevant sections of the Company's Act, discuss in detail how a company should manage, raise, and maintain its capital?

Reference no: EM132967512

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