Section 62: Reduction of stated capital

62. Reduction of stated capital (1) Subject to subsection (3), a company may by special resolution reduce its stated capital to such amount as it thinks fit. C35 – 49 [Issue 1] Companies Act (2) Public notice of a proposed reduction of a company’s stated capital shall be given not less than 30 days before the resolution to reduce stated capital is passed. (3) A company may agree in writing with a creditor of the company that it shall not reduce its stated capital— (a) below a specified amount without the prior consent of the creditor; or (b) unless specified conditions are satisfied at the time of the reduction. (4) A resolution to reduce the stated capital passed in breach of any agreement referred to in subsection (3) shall be invalid and of no effect. (5) A company shall not take any action— (a) to extinguish or reduce a liability in respect of an amount unpaid on a share; or (b) to reduce its stated capital for any purpose (other than the purpose of declaring that its stated capital is reduced by an amount that is not represented by the value of its assets), unless there are reasonable grounds on which the directors may determine that, immediately after the taking of such action, the company will be able to satisfy the solvency test. (6) Where— (a) a share is redeemed at the option of the shareholder under section 79 or on a fixed date under section 80; or (b) the company purchases a share under section 68, and the Board is satisfied that as a consequence of the redemption or purchase, the company would, but for this subsection, fail to satisfy the solvency test— (i) the Board shall resolve that the stated capital of the company shall be reduced by the amount by which the company would so fail to satisfy the solvency test; and (ii) the resolution of the Board shall have effect notwithstanding subsections (1) to (3). (7) A company which has reduced its stated capital shall within 14 days of the reduction give notice of the reduction to the Registrar, specifying the amount of the reduction and the reduced amount of its stated capital. Sub-Part B – Dividends and Distributions