{{Short description|Corporate law: reduction of capital below legal minimum}} {{More sources needed|date=August 2015}}
'''Capital impairment''' is the case when the company lost its asset, so the asset is lower than the stock of a company. One way to avoid capital impairment is reduction of capital without any compensation. Impaired capital may occur when a company incurs losses that result in negative retained earnings, also referred to as a retained deficit. Retained earnings can be reduced by dividend distributions; therefore, excessive dividend payments may contribute to a negative balance. In some jurisdictions, incorporation laws restrict companies from issuing dividends until any retained earnings deficit is resolved.<ref>{{Cite web |title=Impaired Capital: What It Is, How It Works |url=https://www.investopedia.com/terms/i/impaired-capital.asp |access-date=2025-03-20 |website=Investopedia |language=en}}</ref>
==See also== *Bankruptcy *Reduction of capital
==References== {{Reflist}}
Category:Corporate law Category:Financial capital Category:Equity securities
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