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.

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