Quick Summary
Introduction Reduction of share capital is a process by which a company decreases it's issued, subscribed, or paid-up share capital. This can be undertaken for various purposes, including restructuring, correcting an overcapitalized balance sheet, or returning excess funds to shareholders. Under th
Daily Limit Reached
You have reached your daily limit of 2 Free Articles
Subscribe to CCI PRO for unlimited access
Why Upgrade to CCI PRO?
- No Ads
- WhatsApp Broadcasts
- Daily E-Newsletter
- Unlimited Articles Access
BEST VALUE
2 YEAR PLAN
3,499
(Inclusive of GST)
1 YEAR PLAN
1,999
(Inclusive of GST)
Buy CCI PRO Now
Already a PRO member? Login here for an ad-free experience.
The reduction of share capital is governed by Section 66 of the Companies Act, 2013, read with The National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016.
Companies may reduce share capital to return excess paid-up capital to shareholders, cancel uncalled or unpaid share capital, or adjust for capital lost or diminished.
The company's Board of Directors must first approve the proposal to reduce share capital, followed by passing a special resolution at a general meeting with at least 75% shareholder approval.
An application for confirming a reduction of share capital must be made in Form RSC-1, along with the prescribed fee of Rs. 5000/-.
The NCLT issues notices to the Central Government, Registrar of Companies (RoC), SEBI (if listed), and directs the company to send notices to each creditor, inviting objections.
Yes, if the Tribunal is satisfied that all creditor claims have been resolved, secured, or consented to, it can waive the requirement to send notices or publish advertisements.
CAclubindia
