{"id":176495,"date":"2022-10-06T20:24:29","date_gmt":"2022-10-06T19:24:29","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=176495"},"modified":"2026-01-14T00:18:11","modified_gmt":"2026-01-14T00:18:11","slug":"doctrine-maintenance-share-capital","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/doctrine-maintenance-share-capital\/","title":{"rendered":"What is the Doctrine of Maintenance of Share Capital in the UK?"},"content":{"rendered":"\n

As a shareholder and director in a small or medium-sized company, you may have come across references to the doctrine of maintenance of share capital. The doctrine of maintenance of share capital refers to a general rule of company law that your company cannot normally return the capital its shareholders have invested. This article will explain the basic principles of what the doctrine of maintenance means and what practical effects it might have on your company. It will also provide an overview of the exceptions to this general rule of UK company law. <\/p>\n\n\n\n

Share Capital<\/h2>\n\n\n\n

A company\u2019s capital<\/a> refers to all the valuable assets it owns and can use to make a profit. In the context of share capital, this refers to the assets, usually cash, that the shareholders have transferred to your company in exchange for their shares. <\/p>\n\n\n\n

Once anyone transfers cash or any other valuable assets to your company in exchange for shares, your company cannot return the value of the shareholder\u2019s investment, even if the shareholder demands it, unless in specific circumstances. This is the basis for what lawyers call the doctrine of maintenance of share capital. <\/p>\n\n\n\n

Purpose of the Doctrine <\/h2>\n\n\n\n

As a company owner, you benefit from the principle of limited liability unless you commit fraud or serious misconduct. This means that your company\u2019s creditors cannot come after your shareholders if your company cannot meet its obligations. <\/p>\n\n\n\n

Therefore, the doctrine aims to protect your company\u2019s creditors, such as its bank lenders and trade suppliers.<\/p>\n\n\n

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