This essay examines the rules regarding compulsory liquidation due to lack of capital in  Chapter 25, Section 13-20a ABL. The purpose of the regulation is to make companies with financial problems liquidate on time to limit the creditor's losses. The rules regarding compulsory liquidation due to lack of capital are supposed to work as a protection for a company’s creditors. The regulation is based on the the requirement that a limited liability company shall have a minimum capital of 50 000 SEK.  If the board suspects that half of the registered share capital has been consumed they shall follow the duties that are presented in Chapter 25 Section 13-20a ABL. If the board of directors have any reason to believe that a critical capital shortage has occurred, they shall draw up a control balance sheet and let it be reviewed by the company's auditor. If the control balance sheet shows that the company has a critical capital shortage the board of directors shall convene to a first control meeting. After the first control meeting the respite period starts, which gives the board eight months to either heal the capital shortage or decide on liquidation. If the board doesn't follow the obligations they can be sanctioned with a personal liability for payment. 

Wrongful trading in sec. 214 Insolvency Act is the correlative regulation in England. The regulation regarding wrongful trading has the purpose to get the board to act when there is no reasonable prospect of avoiding insolvent liquidation. In sec. 214 Insolvency Act the directors should take every step with a view to minimising the potential loss to the company’s creditors. If the directors does not meet this requirement they can be held personally liable for company debts. 

The purpose of this essay is to investigate the rules regarding compulsory liquidation due to lack of capital. This essay also examines the rules regarding wrongful trading in England. The pros and cons linked to the regulatory systems will be brought forward, which then leads to a discussion about if wrongful trading is a more effective alternative to Swedish law.    

The investigation has shown that the share capital, which the rules regarding compulsory liquidation due to lack of capital are based on, does not constitute a true creditor's protection. If the requirement of a minimum share capital is removed the regulation regarding compulsory liquidation due to lack of capital must be changed. There are shortcomings in Swedish regulations due to difficulties regarding evidence as well as the creditor interest are not taken into account to such a large extent. The English regulation about wrongful trading is considered to be more effective. Should an amendment similar to wrongful trading  be made in swedish law a certain necessary condition should be clarified to create a foreseeable system.