Reduction of Share Capital

Guidance

We believe everyone is entitled to high quality legal advice, so we’ve put together some free guides on key areas of corporate and commercial law. Just select the topic you want to explore.

WHAT IS A REDUCTION OF SHARE CAPITAL?

The share capital account of a company is the total amount paid to the company for its shares (the aggregate amount subscribed). A fundamental principle of company law is that this share capital account must be ‘maintained’ in order to provide a measure of protection to creditors – it must not be distributed to shareholders except in narrow circumstances. A reduction in share capital is a reduction in the share capital account of a company in accordance with procedures set-out in the Companies Act 2006.

Private and public companies can reduce their share capital by passing a shareholders’ special resolution, provided that there are no relevant restrictions in the Articles of Association.

A private company must support this special resolution with a Solvency Statement of the directors, or seek confirmation of the resolution from the court. A public company’s only option is to seek confirmation of the special resolution from the court.

NOTE: After a reduction of share capital supported by a Solvency Statement there must be at least one shareholder holding non-redeemable shares.

Do I need help to reduce share capital?

Our Reduction of Share Capital Service provides you with all of the necessary advice and paperwork to effect a reduction of share capital. We provide clear and straightforward advice, draft all of the required documentation and make all required filings. Click the following links for a summary of the procedure for reducing share capital by Solvency Statement, or by court application.

If you are considering or have decided to reduce a company’s share capital then you will also need to consider the most appropriate way in which to effect the reduction. We would be happy to advise you in this regard.

We can provide you with a fixed quotation for preparing all of the necessary documentation.

What is the next step?

Click the ‘MAKE ENQUIRY’ button below or call us on 08456 800 727.

Our Reduction of Share Capital Service is suitable for public and private companies incorporated in the United Kingdom.

What does our package include?

  1. A review of the company’s Articles of Association and any Shareholders Agreement in relation to the planned reduction.
  2. Advice on your proposed course of action.
  3. A Solvency Statement or court application (as applicable).
  4. A Directors’ statement of compliance (if required).
  5. Directors and shareholders’ resolutions as required.
  6. Filings at Companies House.
  7. Update company registers, new share certificates as required.

REDUCTION OF SHARE CAPITAL SERVICE

From £975+VAT

Please contact us for a fixed quotation

NOTE: Private companies can now reduce their share capital without court approval. This greatly simplifies the procedure and reduces the cost of implementation.
The court will not register a reduction by a public company where the reduction brings the nominal value of the share capital below the authorised minimum for public companies (£50,000), unless the public company first re-registers as a private company

Private companies limited by shares can reduce their share capital by special resolution:

  • supported by a directors’ Solvency Statement; or
  • confirmed by the court.

Public companies can only reduce their share capital by special resolution confirmed by the court.

The reduction itself can be effected in any way. For example, a company may:

  • cancel paid-up share capital that is lost or unrepresented by available assets;
  • release the shareholders’ liability to pay-up share capital; or
  • repay paid-up share capital in excess of the company’s needs.