Section 10: Reduction of cell share capital

10. Reduction of cell share capital (1) A protected cell company or a holder of cell shares may apply to the Registrar to authorise the company to reduce the cell share capital— (a) where the applicant is the company, of any of the company’s cells; or (b) where the applicant is the holder of cell shares, of the cell in which the cell shares are held. (2) A reduction may be authorised— (a) to extinguish or reduce the liability on any cell shares in respect of cell share capital not paid up; or (b) with or without extinguishing or reducing any liability on any cell shares, to— (i) cancel any paid-up cell share capital which is lost or unrepresented by available cellular assets; or (ii) pay off any paid-up cell share capital which exceeds the company’s requirements. (3) The Registrar shall authorise the reduction of cell share capital where he is satisfied that— (a) a special resolution referred to as a “resolution for cell share capital reduction” is filed; (b) the company has provided sufficient guarantees to secure payment of its liabilities to every creditor of the cell in respect of which the reduction of cell share capital is made; (c) no creditor is unfairly prejudiced by the reduction; and (d) the company demonstrates that it satisfies the solvency test. (4) For the purposes of subsection (3) (d), a company shall be regarded as satisfying the solvency test where— (a) the company is able to pay its debts as they become due in the normal course of business; and (b) the value of the company’s assets is greater than the value of its liabilities including contingent liabilities. [Issue 1] P42 – 6 Revised Laws of Mauritius (5) For the purposes of subsection (4) (b), account may be taken of— (a) the most recent financial statements of the company; (b) all other circumstances that all directors know or ought to know that affect, or may affect, the value of the company’s assets and the value of the company’s liabilities, including its contingent liabilities; (c) any valuation of assets or estimates of liabilities that are reasonable in the circumstances; (d) the likelihood of any contingency occurring; (e) any claim the company is entitled to make and can reasonably expect to be met; and (f) any contingent liability the company can reasonably expect to reduce or extinguish. (6) Any creditor who is prejudiced by the authorised reduction of capital may apply to the Court for redress or for an order restraining or prohibiting the reduction of cell share capital and the Court shall, in determining any such application, have regard to this section and such other factors or circumstances which the Court deems fit. PART III – CREDITORS