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?

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Answer

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

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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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