The Articles of Association may restrict a company’s ability to reduce its share capital and should be reviewed in advance of any proposed reduction. If the Articles do contain restrictions then they will need to be adhered to, or the Articles amended, before the reduction can take place.

A special resolution is required to amend the Articles of a company.

If the company has more than one class of shares, then class consent will be necessary if the reduction varies the rights of that class.

Any relevant agreements, such as a Shareholders Agreement or loan documentation should be reviewed carefully to identify any restrictions on the companys ability to reduce its share capital.

If the directors of a private company do not hold the opinions required in order to make a Solvency Statement then the reduction can only be undertaken with court approval.

Creditors do not have the right to object to a reduction in capital supported by a Solvency Statement, by may on a reduction approved by the court.