Reserve capital, Business Law and Ethics


The reserve capital is defined by S.62 of the Act as the portion of the issued but uncalled capital of a limited company which the company's members, by special resolution, have resolved that the company shall not call up unless and until it is in liquidation. It is to be called up only for purposes of the liquidation. As soon as the resolution is passed, the capital is, as it were, "put on reserve". The directors' power under the articles to make calls on shares will not be exercisable in respect of that capital, unless the company is being wound up. It is referred to in the marginal note to S.62 as "the reserve liability" of a limited company.

Posted Date: 1/12/2013 3:01:50 AM | Location : United States

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