Companies are allowed to use their profits and distribute it as dividend. However, they are prohibited from distributing its capital. What is the rational behind this restriction?

Question

Answer

to protect prospective creditors due to the limited liability of the shareholders.

Answer

to enable the payment of future dividends.

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to facilitate a non-current asset replacement plan.

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to use for salary and wages of employees

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Companies are allowed to use their profits and distribute it as dividend. Howeve...

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