The conflicts of interests within the objectives of minimum capital Essay

The conflicts of interests within the objectives of minimum capital maintenance according to the european corporate law - Essay Example And the conflicts may also relate to several organizational issues, including the maintenance of the minimum capital according to the corporate legislations prevalent in the European Continent. This note presents a review of the possible conflicts, reasons for the occurrence of them together with an evaluation thereof. It has often been contended that the provisions of the various European Company Law legislations that deal with the share capital of the companies have been formed solely with the object of protecting the rights of one class of the external stakeholders namely the ‘creditors’. The need to protect the creditors from the improper use of the ‘doctrine of limited liability’ by the shareholders had been felt for quite a long time even since the time of Salmon v Salmon case that is being quoted quite often in connection with the ‘corporate veil’ of the companies. â€Å"A common rationalization of the share capital provisions is that they protect corporate creditors from the abuse of the limited liability by shareholders† (John Armour 2000) The room for such conflicts between the rights of the shareholders and the protection of the interests of the creditors had always been there in the development of corporate culture over the periods In spite of the presence of various of various company and insolvency law regulations, such conflicts endure over time and it had also necessitated a periodic review of the various company law provisions governing the shareholders’ rights. An article by Asian Development Bank (ADB) Institute opines that â€Å"the typical corporate governance framework views shareholders as the principal, and the objective of the management of a corporation is to maximize the interests of the shareholders.† The law and practices pertaining to the shareholders’ rights do not vary much between countries as they have the common interest of maximizing the interest