Effective Protection of Creditors’ Interests in Private Companies: Obligatory Minimum Capital Rules Versus Contractual and Other Ex Post Mechanisms

Olga Petroševičienė

Abstract


This article reveals arguments for and against the initial minimum capital of private companies. It explains that the initial minimum capital rule, which was entrenched in the Second Company Directive as of 13 December 1976, provides for little meaningful benefit in terms of creditors’ protection in private companies. Furthermore, the present paper reviews possible alternative mechanisms for creditors’ protection that could achieve the same effects as the minimum capital rule, although more efficiently and at lower costs. Finally, the author evaluates the legislation on the initial capital of private companies in Lithuania and proposes some potential future trends in this field.

Keywords


authorized capital of a public limited liability company; limited liability; creditors’ protection in a private company; considerable capital reduction; capital sufficiency; capital maintenance

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"Societal studies" ISSN online 2029-2244 / ISSN print 2029-2236