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Company Law

Reduction of capital

In Chapter 16: Alteration (Including Reduction) of Capital

Company Law

Author:
Ronan Keane
Publisher:
Bloomsbury Professional
Edition:
Fourth edition
Publication Date:
January 2007
Law As Stated At:
1 September 2006
[16.11] Where a company proposes to reduce its share capital, it can usually do so only with the confirmation of the court. As we have seen, importance has always been attached to the maintenance intact by the company of its capital, but there are circumstances where it has been thought legitimate for a reduction to be effected. [16.12] A reduction of capital can take two forms. First, the amount involved may be returned to the shareholders in the form either of cash or assets or their liability for the uncalled capital reduced or extinguished. Secondly, there may be no actual return of cash or assets, the reduction in this case taking the form of an adjustment to the balance sheet to bring the capital into line with the assets. [16.13] A reduction of the first type may be considered desirable because the company is over-capitalised, ie has more capital than ...
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