Ways of reducing paid up share capital of the company
This query is : Resolved
Pranjul Gupta
(Querist)
25 November 2014
Pls provide me the ways of reduction of paid up share capital of the company
CS Mitesh Mehta
(Expert)
27 November 2014
1. Surrender of Shares-It means the surrender of shares already issued to the company by the registered holder of shares. Where shares are surrendered to the company, whether by way of settlement of a dispute or for any other reason, it will have the same effect as a transfer in favour of the company and the amount to a reduction of capital.
The Companies Act contains no provision for Surrender of Shares. Thus surrender of shares is valid only when Articles of Association provide for the same and:
A. Where forfeiture of such shares is justified
B. When shares are surrendered in exchange for new shares of same nominal value.
2. Forfeiture of Shares – A company may if authorized by its articles, forfeit shares for non-payment of calls and the same will not require confirmation of the court. Where power is given in the Articles, it must be exercised strictly in accordance with the regulations regarding notice, procedure and manner stated therein; otherwise the forfeiture will be void. Forfeiture will be affected by means of Board resolution.
3.Buy back of its own shares
4.Redemption of redeemable preference shares
The Companies Act contains no provision for Surrender of Shares. Thus surrender of shares is valid only when Articles of Association provide for the same and:
A. Where forfeiture of such shares is justified
B. When shares are surrendered in exchange for new shares of same nominal value.
2. Forfeiture of Shares – A company may if authorized by its articles, forfeit shares for non-payment of calls and the same will not require confirmation of the court. Where power is given in the Articles, it must be exercised strictly in accordance with the regulations regarding notice, procedure and manner stated therein; otherwise the forfeiture will be void. Forfeiture will be affected by means of Board resolution.
3.Buy back of its own shares
4.Redemption of redeemable preference shares
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