The three principles of capital in company law are mainly the principle of capital determination, the principle of capital maintenance and the principle of capital invariance. Specifically, the principle of capital determination means that when a company is established, the total capital of the company should be stated in the articles of association, which should be fully subscribed or raised by the promoters.
For a company, the most important factor for it to continue to operate and maintain its vitality is strong financial support. Therefore, after the establishment of the company, it is necessary to require necessary principled restrictions on capital conditions, especially the capital can never be changed and needs stability.
Overview of principle generation:
Because the shareholders of an unlimited liability company bear unlimited joint and several liability for the debts of the company. Corporate debt and shareholders' personal debt cannot be separated, and the three principles of capital have no room for survival. After the emergence of limited liability, due to the separation of corporate responsibility and shareholders' personal responsibility, the company is liable for its debts with all its assets.
Be responsible for the company to the extent of its capital contribution or shares held. When a company goes bankrupt or disbands due to business failure, creditors can't directly recover the personal property of shareholders to pay debts outside the company, so the creditors of the company are at a disadvantage in the transaction. In order to protect creditors and maintain the normal operation of the company. Lawmakers have stipulated a series of legal provisions, and scholars have summarized these provisions with the same jurisprudence, which is called "Three Principles of Capital".