Capital Maintenance

Reduction of share capital

Public Companies
i:pass a special resolution
ii:Apply to court
iii:File doc to registrar

Private Companies
i:special resolution (solvancy statement)company wil able to pay it's debts
within a year
ii:Both resolution and solvancy statement filed to registrar within 15 days

A limited company
is permitted without restriction to cancel unissued
shares

limited company with a share capital

wishes to reduce its issued share capital

i:use article power or amend the article by special

resolution

ii: or obtail court permission

A private company
need not apply to the court if it supports its special
resolution with a solvency statement.(declaration by
directors)

company may reduce its capital for

following reasons
Reduce or cancel liabilities on partlypaid shares,
Return capital in excess of the company's needs,

Method of reduce Share capital

Reduce Liability On Partly Paid Shares
if paid of 75p of 1$

then reduce nominal value to 75p

Pay off part of paid-up share

reduces nominal value of fully paid shares from 1 to
70p and repays this amount to shareholders

Role of the court

*first concern is the effect of the reduction on the
company's ability to pay its debts

*If the court is satisfied that the reduction is in order, it

confirms the reduction

Distributing dividends
Power to declare dividends
its often included in articles

i:company my declared it in G.M

ii: No dividend may exceed the amount recommended
by the directors who have an implied power