Reduction of capital, Business Law and Ethics

Reduction of Capital:

 

4.1 The general rule is that it is illegal for a company to reduce its capital. This is so because such a reduction would be tantamount to reducing the security available to the company's creditors: Trevor v Whitworth (48). However, S.68 (1) authorizes a company to reduce its capital if:

a) The company's articles authorizes it to do so. If the articles do not confer the authority they can be amended by the inclusion therein of the requisite authority.

b) The company passes a special resolution to that effect. The resolution is defined by S.68 (2) as "a resolution for reducing share capital".

c) The court confirms the proposed reduction. The court's confirmation is required in order to protect the interests of the company's creditors, minority members and the general public.

Posted Date: 1/12/2013 4:27:29 AM | Location : United States







Related Discussions:- Reduction of capital, Assignment Help, Ask Question on Reduction of capital, Get Answer, Expert's Help, Reduction of capital Discussions

Write discussion on Reduction of capital
Your posts are moderated
Related Questions
Legal justification - Constructive notice: The legal justification for this rule is that since the company's public documents in its file at the Companies Registry are availab

Question 1: (a) What is meant by: (i) Ratio Decidendi (ii) Obiter Dicta (iii) Legal Doctrine (b) Distinguish between Criminal Law and Civil Law.

The research methods module arrives towards the end of the MBA programme and is not only intended to integrate knowledge acquired on the programme, but also to provide an understan

Doctrine of Stare Decisis However the doctrine of "stare Decisis" or "judicial precedent" is a legal rule which utilized a judge to refer to the earlier cases decided through

State the legal consequences of an wrongful act Article 28, 30 and 31 state the legal consequences of an internationally wrongful act. They are as follows:- Article 28: Lega

What are the ways of aggregate demand policy To illustrate some of the issues involved in policy coordination we will focus on monetary policy. We discuss three ways in which

The second factor which is necessary for a claimant to impose claim on other person is to have a cause for the action taken by him. Hence it is important to have a proper link betw

Frank, a student at Anne Arundel Community College, is on his way to class one day. He enjoys his class very much and is looking forward to this particular class on tort law, but d

Effect Of Rescission: Where a contract of allotment is rescinded, the former shareholder will be entitled to his money back (normally with interest) and to a refund of any exp

Define the principle of prescription Prescription   (res  nullius-an  asset susceptible of acquisition but presently under the ownership or sovereignty of no legal person). Pr