Reduction of Capital and Redemption/ Purchase of Own Share Capital

Question 1

1. Reducing share capital

reasons (2)

Answer 1

1. If the share capital is greater than the actual net assets
2. where the company has surplus cash that it may wish to return to shareholders

Question 2

1. Reducing share capital- by the court (public and private)

statute

Answer 2

s645-s651

Question 3

1. Reducing share capital - public and private, by court

requirements (2)

Answer 3

1. a special resolution of the shareholders, followed by
2. an order of the court

Question 4

1. Reducing share capital - private, by court

requirements (2)

Answer 4

1. a special resolution of the shareholders
2. solvency statement of the directors

Question 5

which subsection 648-
The court may make an order confirming the reduction of capital on such terms and conditions as it thinks fit

Answer 5

s648(1)

Question 6

which subsection 648 -
Before any such order is made, however, the court must be satisfied that every creditor entitled to object has either consented to the reduction or that his debt has been repaid or secured

Answer 6

s648(2)

Question 7

which subsection 649-
The reduction of capital will take effect on the registration of the court order confirming the reduction and statement of capital at Companies House

Answer 7

s649(5)

Question 8

2. Reducing share capital -private, by court

statute

Answer 8

s 645~651

Question 9

2a) Solvency Statement statute-
- Must be made not more than 15 days before the date on which the special resolution is passed
- Must be signed by all directors

Answer 9

s642(1)