How effective are these rules in ensuring that the company‟s capital is maintained?

• These rules are effective in ensuring that the company‟s capital is maintained in that: i. They prohibit the payment of dividend from capital.

ii. Dividend is only payable if a company is solvent and a going concern.
iii. The rate of dividend payable to determined directors who are entrusted with the management of the company.

However, these rules are not as effective as may be required in that members are free to alter a good number of them to the detriment of the company‟s capital.

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