Reduction of capital, Business Law and Ethics

Assignment Help:

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.


Related Discussions:- Reduction of capital

Explain the meaning of the term reverse logistics, Question 1: (a) What...

Question 1: (a) What do you understand by the term Logistics Management? (b) What are the three types of costing which come under storage? (c) Explain the role of Public

Unsecured trade creditors, Unsecured trade creditors: It refers to a "...

Unsecured trade creditors: It refers to a "class" of members or of creditors. Obviously if two or more companies are involved or if one company has two classes of shares, eg.

Notice of resignation, Notice of resignation: Regarding clause (e) abo...

Notice of resignation: Regarding clause (e) above, it was held in Latchford Premier Cinema Co. V Ennion that a verbal notice of resignation which is given to, and is accepted

Successive stages of a capital reorganisation, Successive stages of a capit...

Successive stages of a capital reorganisation: There was a sequence of general and class meetings to approve the successive stages of a capital re-organisation.  Out of 1,600

What are intellectual property rights?, Question 1 What are cybercrimes? M...

Question 1 What are cybercrimes? Mention in detail what are considered as cybercrimes Question 2 What are Intellectual Property Rights? Explain in detail Question 3 What

Duties of auditors, DUTIES OF AUDITORS: The duties of auditors are exp...

DUTIES OF AUDITORS: The duties of auditors are explained in the following cases. 1. RE: KINGSTON COTTON MILL CO. (1896)(CHANCERY) For some years before a company was wou

Illustration of rules relating to consideration, Illustrtaion of Rules rela...

Illustrtaion of Rules relating to consideration Foakes v Beer (1884) Actually On the date 11th of August, 1875 Mrs Beer wrapped judgment next to Dr. Foakes for £2,077 1

The acts of non-state actor, The acts of non-state actor More important...

The acts of non-state actor More importantly, the concept of non-state actor needs be discussed by the concept of state responsibility, that is to say how and to what extent a

Define the term - social attainment and economic growth, Define the term - ...

Define the term - social attainment and economic growth Many problems can also be seen either as private problem for those who experience them or as public policy failures that

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd