what is the key difference between reduction of capital and dimunition of capital ?
pls help!!
pavithra doss (student) (234 Points)
26 October 2010what is the key difference between reduction of capital and dimunition of capital ?
pls help!!
sudhakar ca cwa
(service)
(1518 Points)
Replied 26 October 2010
i m not sure
reduction of share capital means reduction from Rs. 10 Lakhs to Rs.5 Lakhs and court permission is required for this and company needs to use 'AND REDUCED' in balance sheet for some years
dimunition of capital means reduction of face value of share i.e Rs.10 to Rs.5 (i m nt sure about this, bt i think it is rgt)
CA Manish Kumar
(Chartered Accountant)
(383 Points)
Replied 26 October 2010
Hey Sudhakar you are not correct.Here is the meaning and the difference between the reduction of capital and dimunition of capital:
Reduction of Share capital can be done by three ways:
the reduction of capital is done to absorb the accumulated losses and the approval of the Court is required for the reduction of share capital along with Special resolution.
Dimunation of Capital means cancelling the unissued portion of share capital.The ordinary resolution is required for this.
The basic difference between both the terms is that reductions means reducing the issued share capital while the Dimunation of Capital means cancelling the unissued share capital which is above the requirement of the company
sudhakar ca cwa
(service)
(1518 Points)
Replied 26 October 2010
thanks manish
you are correct.
I know this but i forgot.
swapnil
(CA Final)
(598 Points)
Replied 26 October 2010
Reduction of share capital sec 94(1)
Diminishing of authorized share capital sec 100.
1. Reduction of share capital means reduction of issues / paid up share capital, where as diminishing of authorized share capital means diminishing of authorized share capital of the company.
2. Reduction of share capital can be affected only when passing special resolution, where as diminishing of authorized capital is possible when passing ordinary resolution, provided article so authorized.
3. Reduction of share capital needs confirmation by the court, where as diminishing of authorized capital no need to confirmation by the court.
4. In case of reduction of share capital, when all procedure has been compliance than company must have to quote the word “and reduce” after the name of the company.
In case of diminishing of authorized capita notice is to be given to Rigistrar within 30 days from the date of cancellation, because after our notice Rigistrar make necessary alteration in M.A and A.A, where as reduction of share capital there is details procedure in sec 103.there is no such prescribe limits.
Note : when u quote u r answer, and diminishing of authorized share capital has coming that time remember don’t write reduction of authorized share capital, because in exam I wrote that same and might be lose the marks.
Thanks 4 sharing and thanks manish also and best of luck.
CAclubindia
