The Companies Act vs The Companies and Other Business Entities Act: A comparative analysis vis a vis The protection of corporate creditors in Zimbabwe
Introduction One of the most troublesome of questions in company law is how company law should try to balance the legitimate main concern of shareholders, that they will be able to realise a return on their investment, with the chief concern of the creditors, that the board of directors, elected by the shareholders, will, especially if the directors see the company in trouble, drain it of funds and other assets, through dividends, share repurchases or otherwise, leaving insufficient assets to pay the creditors debts. The pre vious regime , as provided for in the old Companies Act , (Capital Maintenance Regime) was initially developed by the courts and the general principle established by the cases may be stated as requiring that a company with a share capital is bound to obtain a proper consideration for the shares which it issues and refrain from handing back any or all of the fund so acquired to its members except by a lawful distribution of profits or a lawful reduction of ca