Restricted equity

Restricted equity is equity that is bound to a limited company. Restricted equity may never be distributed to shareholders.

Restricted equity is a security for other stakeholders (not shareholders) in a corporation such as lenders, suppliers, the state and employees. Restricted equity must exist since the shareholders never have to pay the debt in a bankruptcy. The shareholders in a limited company are free from liability in bankruptcy.

Restricted equity includes share capital, revaluation reserves and other reserves.