Reducing the share capital of a company registered with Companies House in the UK involves a series of legal and procedural steps. This process should be conducted with due diligence and often requires professional advice. Here is an outline of the general procedure:
- Board Meeting: The directors of the company should convene a board meeting to propose the reduction of share capital. This includes deciding the amount by which the capital will be reduced and the reason for the reduction.
- Special Resolution: The company’s shareholders must pass a special resolution to approve the reduction in share capital. This typically requires at least a 75% majority vote in favor.
- Solvency Statement (Optional): If the company is reducing its share capital by a solvency statement, the directors must make a statement of solvency, confirming that the company can pay its debts. This statement must be made within 15 days before the resolution.
- Court Approval (Optional): If the reduction is not supported by a solvency statement, court approval is required. This involves applying to the court, and the court will consider whether the reduction is fair and equitable to all the shareholders and creditors.
- Creditor Protection: There may be a requirement to settle or secure the claims of any creditors who are opposed to the reduction.
- Filing with Companies House: After the resolution is passed (and court approval obtained if necessary), the company must file the necessary documents with Companies House. This includes the special resolution, a copy of the solvency statement if used, and Form SH19.
- Statement of Capital: A statement of capital must be filed along with Form SH19, detailing the company’s total number of shares and aggregate nominal value post-reduction.
- Updating Company Records: The company must update its own records, including the register of members, to reflect the new share capital.
- Publication of Notice: In some cases, the company might also need to publish a notice about the reduction in share capital in the Gazette, which serves as an official public record.
Given the complexity and legal implications of reducing share capital, it’s highly recommended to seek legal and financial advice before proceeding. The process can vary depending on the specific circumstances of the company and its financial situation.
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