reduction of capital

reduction of capital

a company's capital may be lawfully reduced in two ways:
  1. (1) by extinguishing or reducing the liability of its members on any uncalled capital; or
  2. (2) by repaying to them the nominal value of their shares.

Where a company has suffered losses, it can cancel paid-up shares on the ground that they are unrepresented by available assets. A reduction requires a special resolution; it must be authorized by the articles and confirmed by the courts.

References in periodicals archive ?
The distribution comprises a reduction of capital of $A2.
The total amount of the suit varies between US$535-US$680 million, sums that allegedly resulted from a loss of cash flow or from a reduction of capital.
A gloomy forecast has also led to a reduction of capital projects at Abitibi-Price Inc.
This combination results in an order of magnitude reduction of capital and operating milling costs for granular material compared with that of conventional ball and rod mills.
Separate record dates will be set for the reduction of capital and dividend comprised in the First Distribution and these will be announced after the Court order has been made.
Both of these services deliver on two major needs for enterprises -- simplified network management and reduction of capital costs and expenses," said Tony Tomae, senior vice president of marketing for WilTel.
However, the reduction of capital expenditure by many network equipment manufacturers (NEMs) and service providers and carriers (SP&Cs) adversely affect the revenues for network monitoring systems and protocol analyzers.
In its prior press releases, the Company had announced that its consolidated balance sheets had reflected the unamortized portion of construction allowances from landlords as a reduction of property and equipment instead of as a deferred rent credit, and statements of cash flows had reflected construction allowances as a reduction of capital expenditures within cash flows from investing activities, rather than cash flows from operating activities.
In addition, California Pizza Kitchen's statements of cash flows reflected construction allowances as a reduction of capital expenditures within cash flows from investing activities, but now will be reflected as cash flows from operating activities.
The Company will record construction allowances from landlords as a component of rent liability on its balance sheet and will adjust its statements of cash flows to reflect construction allowances as cash flows from operating activities rather than a reduction of capital expenditures within cash flows from investing activities.
Previously, construction allowances received from landlords for leasehold improvements were accounted for as a reduction of capital expenditures.
Managed EWAN delivers on two major needs for enterprises -- simplified network management and reduction of capital costs and expenses," said Tony Tomae, senior vice president of marketing for WilTel.

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