Question
Paid up capital may be diminished or lost in the course of the company's trading; that is a result which no legislation can prevent; but
"Paid up capital may be diminished or lost in the course of the company's trading; that is a result which no legislation can prevent; but persons who deal with, and give credit to a limited company, naturally rely upon the fact that the company is trading with a certain amount of capital already paid, as well as upon the responsibility of its members for the capital remaining at call; and they are entitled to assume that no part of the capital which has been paid into the coffers of the company has been subsequently paid out, except in the legitimate course of its business." - per Lord Watson in Trevor v Whitworth (1887) 12 App Cas 409 The principle laid down in Trevor v Whitworth is a company is prohibited from purchasing its own shares. Besides, a company has to comply with the statutory requirements if it intends to return the capital to the shareholders. In light of the passage above, discuss THREE (3) reasons why a company shall not buy back its shares. Required: - Your answer shall be in paragraph and essay form, not in point/bullet/numbered form. - Your essay shall be used in Malaysia Law
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