Minimum capital is a concept used in corporate law and banking regulation to stipulate what assets the organisation must hold as a minimum requirement. The purpose of minimum capital in corporate law is to ensure that in the event of insolvency or financial instability, the corporation has a sufficient equity base to satisfy the claims of creditors. In banking and financial regulation it is normally referred to as the capital requirement.
Corporate law
All public companies within the European Union are required to hold at least €25,000 in capital, although many countries go above this minimum requirement. The requirement is e.g. £50,000 in the United Kingdoms (England and Wales), of which at least 25% must be paid up (of the nominal amount and of any premium).
Banking regulation
Main article: Capital requirementSee also
References
- Armour, John (2006). "Legal Capital: An Outdated Concept?". European Business Organization Law Review. SSRN 910826.
- Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law
- "Minimum capital requirement around the world - DLA Piper Guide to Going Global".
- "Minimum capital in UK - England and Wales - DLA Piper REALWORLD".