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Related to undercapitalization: overcapitalization


The condition of lacking sufficient capital to perform normal business operations.
References in periodicals archive ?
Frustrated with interference from the WB and IMF, Argentina, Brazil, Paraguay, Uruguay, Ecuador, Bolivia and Venezuela in 2009 established their own monetary fund, BancoSur, which unfortunately failed to get off the ground due to undercapitalization. Perhaps it is time for Gulf states and their Arab allies to consider something similar, offering unconditional loans with funding from wealthier countries.
A court may pierce the veil in three instances: 1) "when the unity of interest and ownership is such that the separate personalities of the [LLC] and the individuals no longer exist and to adhere to that separateness would work an injustice;" 2) where the individual sought to be held liable attempted to use the LLC veil to evade a personal obligation, perpetuate a fraud or crime, commit an injustice or gain an advantage and 3) where the LLC's inability to satisfy a judgment against it is the result of deliberate undercapitalization.
Though Chinese commentary further suggests that undercapitalization can itself constitute abuse, less than 1 percent of successful piercing cases reported in this September's National University of Singapore Working Paper cited insufficient capital; major factors were commingling of funds, fraud or exercise of undue control over the entity being pierced.
reorder priorities) in circumstances where the creditor engaged in inequitable conduct, such as fraud, breach of fiduciary duty, undercapitalization, or due to use of the debtor as an alter ego.
Small developers will suffer severely due to their undercapitalization and lack of market recognition, and some will likely crash.
(2) continued deliberate undercapitalization in the form of excessive dividends or failure to adequately separate the firm's and the owners' assets, and
"The number one downfall of small businesses with as many asterisks as you can think of is undercapitalization," said Tony Perrone, a partner at DSJCPA, a public accounting firm in Westbury.
The issue of financing, as a major impediment to business success, is further supported by studies that found undercapitalization is frequently the biggest obstacle that an entrepreneur can face when it comes to growth (Brush et al., 2006; Hill et al., 2006).
In an attempt to quantify undercapitalization of a microcaptive, the IRS states in Section 2.01 of the notice that if the taxpayers or related persons own at least 20% of the microcaptive, and claims made against the captive are less than 70% of the premiums paid in, or less than 70% of the dividends paid to the owners, or the captive has made some financing arrangement with the owners that didn't result in taxable income (e.g., a loan to an owner), then this is a "transaction of interest."
The General Meeting reviewed the development of the banking activity and the investments needed to implement the restructuring plan, while at the same time meeting the recommendations of ratings agency Standard & Poor's that has always expressed reservations about the undercapitalization of BH, he further said.
A cornucopia of factorsthe high cost of food and labor, undercapitalization, and what the Cornell Hotel & Restaurant Administration Quarterly calls "organizational adolescence," or growing painsmakes enduring success unlikely.