A more recent version of these Reduction Of Capital Crib Sheet notes – written by Cambridge And Oxilp And College Of Law students – is available here.
The following is a more accessble plain text extract of the PDF sample above, taken from our Business Law and Practice Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Reduction of Capital
1. Aims a. b. c. d.
Create distributable reserves Return surplus capital Assist in buy-back or redemption of shares Distribute assets
2. 641(6) Are there restrictions or prohibitions in the Company's articles?
a. Nothing in the Model Articles
3. 642(1) Does reduction result in leaving members with only redeemable shares a. Cannot reduce capital if it leaves only redeemable shares in issue
4. 641(4) A company can a. Reduce further liability on partly paid shares b. Repay any paid-up share capital in excess of company's wants c. Cancel paid-up share capital that is lost or unrepresented by available assets
5. Public or Private company?
a. 641(1)(b) Approve reduction by SPECIAL RESOLUTION a.i. Confirmed by resolution of the court a.i.1. 645(1) Apply to the court to confirm resolution after it has passed b. 645(2) Does proposed reduction involve a diminution of liability in respect of unpaid share capital or the payment to a shareholder of any paid-up share capital?
b.i. 646 Creditor entitled to object to reduction in capital if company will be unable to meet its debts b.i.1. 645(3) Unless the court directs otherwise b.i.1.a. 648 Court may make order confirming the reduction of capital on terms it thinks fit, but must not confirm the reduction unless it is satisfied with respect to every creditor entitled to object that consent has been obtained or the debt has been discharged, determined or secured c. 649(2) Directors make a statement of capital d. 649(1) On production of the order from the court & the statement of capital, approved by the court, Registrar register order & statement d.i. 650(2) Registrar cannot register the order where the reduction of capital has the effect of bringing the nominal value of the allotted share capital below the authorised minimum FOR PUBLIC COMPANIES unless the court directs, or the company is first re-registered as a private company d.i.1. 763(1) Authorised minimum is PS50,000 or the Euro Equivalent d.i.2. 651(1) - (3) Court may authorise a company to be re-registered as a private company without the shareholders having passed a special resolution by section 97 d.i.2.a. Court must specify in order changes to name & articles that need to be made & send notice to the Registrar d.i.2.a.i. 59(1) Name must end with ltd or limited d.i.3. 651(4) On receipt of an application for re-registration from the court, the Registrar will issue a certificate of incorporation, stating that it was issued on re-registration & the date d.i.3.a. 101(4) On issue of the certificate, the company becomes a private company & the changes in name & articles take effect d.i.3.b. 101(5) The certificate is conclusive evidence that the requirements for re-registration have been complied with e. 29-30 send a copy of special resolution to reduce capital to Companies House within 15 days
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