The following Corporate practice note Produced in partnership with Christopher Field of Dechert provides comprehensive and up to date legal information covering:
It is a fundamental rule of English company law that a limited company having a share capital must maintain that capital. Therefore, a company must not reduce its share capital, except as prescribed by law. This capital maintenance rule is intended to protect a company’s creditors by ensuring that the assets representing the share capital of a company remain available to them for future recourse.
Under the Companies Act 2006 (CA 2006), a limited company having a share capital may reduce its capital by:
a redemption of its shares, in accordance with the rights attaching to them and CA 2006, Pt 18, Ch 3
a purchase of its own shares in accordance with CA 2006, Pt 18, Ch 4, if that purchase is followed by a cancellation of those shares
an acquisition of its own shares otherwise than for valuable consideration or a purchase of own shares in pursuance of a court order referred to in CA 2006, s 659(2)(b), if that acquisition or purchase is followed by a cancellation of those shares
a reduction of capital in connection with a redenomination under CA 2006, s 626
a cancellation of shares by a public company in accordance with CA 2006, s 662
the forfeiture of shares, or the acceptance of shares surrendered in lieu, in pursuance of the company's articles of association, for failure to
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