UK and European law links the ability of a company to pay dividends to its statutory accounts. This area of the law has been increasingly seen as in need of reform, for example by the European High Level Group of Company Law Experts.

At the joint initiative of the ASB and the Company Law Centre, an interdisciplinary group has produced a report, which argues that existing law is complex and ineffective. The work was led by Jonathan Rickford, Director of the Company Law Centre, who also edited the report. ASB Chairman Mary Keegan and ASB Technical Director Andrew Lennard participated in the interdisciplinary group.

The report sets out proposals for an approach focussing on maintaining solvency rather than capital. It envisages that there would be no automatic link between the statutory accounts and a company’s ability to make a distribution.

A draft of the report was discussed at a conference on 30 January. It will be finalised shortly and transmitted to Government and the European Commission.

Further information is available at www.biicl.org