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


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.