Lambert Chapman LLP's Richard Thomson considers a reduction in Share Capital
Historically, the share capital of a small company has often been viewed as being locked in. The procedure to return capital was complex and required court approval.
From October 2008, the Companies Act 2006 has simplified the procedure for a company to reduce its share capital.
The share capital can be reduced by passing a Special Resolution and the signing of a Solvency Statement by the Directors.
The company will be able to reduce its share capital either in number or value.
For example:
- Share capital of 500 £1 shares could be reduced to 250 £1 shares.
- Share capital of 500 £1 shares could be reduced to 500 £0.50 shares.
Alternatively, specific share classes, for example Preference Shares, could be paid off.
Monies can be returned directly to the shareholders or a distributable reserve can be created to be utilised by the company.
This is a technical area. If you would like to explore it further please contact Richard on 01376 326266 to discuss the implications
Date:27 November 2009
Lambert Chapman LLP is a limited liability partnership registered in England and Wales under registered number OC328593. The Registered Office is 3 Warners Mill, Silks Way Braintree, Essex CM7 3GB. Partner denotes member of the LLP.
Registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.
Registered with the Chartered Institute of Taxation as a firm of Chartered Tax Advisors
