Laws on capital maintenance and insider dealings
Capital maintenance concept is discusses about the guarantee of issued shared of capital that is seen as guarantee. This is a permanent fund that is wished to pay the payments on the claims of creditors. In this way the issued share capital of the company are not reduced and they are not even returned to the shareholders. It is different in situations only when the companies act or the common law has authorized it. Apart from this the concept of insider dealing is to tell sensitive information of the company to other people or sell the shares of the company when the company has not decided to sell the shares or stocks. According to law insider dealings are considered as a crime and the person will be termed as criminal if he conducts the following acts:
1.Information shred is price sensitive in relation with the shares.
2.Dealing with the shares that contain sensitive information and encourage other people to deal with these shares so they can pass on the sensitive information.
3.Dealing takes place through a broker or professional intermediary (Bawaji, 2012).
In the case of capital maintenance the company can go for it because it will give a guarantee to them in the case of emergency. They will be able to pay the money to the creditors and protect the company from insolvency. As the new venture is about expansion so loss and risk are limited but if the company is unable to pay back to the investors, good will of the company will be disturbed. In case of love interest of Mark, the act he is committing is considered in insider dealings as he is informing other person about the direction of the company that is sensitive information. He is involving a professional in the situation that is considered as a crime. It is advised to Mark, he should not encourage his boyfriend in doing these activities because he will be liable for paying the long term consequences.