Possible manipulation of the ‘solvency and liquidity’ test under the Companies Act makes the test an ineffective alternative to the ‘maintenance of capital’ principle
Authors Joshua Sasha Kadish
ISSN: 2521-2575
Affiliations: Attorney at Fluxmans Inc
Source: Journal of Corporate and Commercial Law & Practice, Volume 6 Issue 1, 2020, p. 40– 53
Abstract
This article argues that although great strides have been made with the abolition of the maintenance of capital principle and its replacement by the solvency and liquidity test, the possible manipulation of the latter test raises questions about whether it is an adequate alternative to the maintenance of capital principle.