Involuntary creditors and the case for accounting-based distribution regulation

Appraises two arguments for the reform of regulation restricting company distributions to shareholders, namely: (1) that in the absence of a minimum capitalisation requirement for companies there could be very little capital for the regulations to protect in any event; and (2) that the regulations cause minor changes to accounting practices to disproportionately affect a company's ability to make a distribution and therefore may distort capital markets. Identifies two ways in which involuntary creditors are protected by the regulations, and considers whether such protection could be provided by other means.