Reduction of Share Colloidal. A company limited by shares or a company

Reduction of Share Colloidal. A company limited by shares or a company limited by guarantee and having a share capital may reduce its share capital in

any way and in particular may: extrinsic or reduce the liability on any of its shares in respect of share capital not called-up.
- cancel any paid-up share capital which is lost or is unrepresented by any tangible asset.
- payoff any paid-up share capital which is in excess often needs of the company.
- payoff paid up capital on the condition that it may be called up again, if necessary.
The above mentioned ways of reducing share capital are given only as illustrations. The share capital may be reduced in any other way.
Company can reduce its Share Capital only if authorized by its Articles. If Articles of the company do' not provide for reduction, it i necessary first to
amend the Articles by calling an e}.1raordinary general meeting of the company and only then reduction in share capital is possible after passing a special
resolution and sanction of the court. Procedure for Reduction. The following procedure may be followed for effecting the reduction of share capital-Sec.
100-103].
(i) Articles must 11rovide for the reduction of share capital.
(ii) Special Resolution. A special resolution effecting the reduction of
share capital must be passed and a copy thereof should be filed with the Registrar within 30 days of passing the resolution.
(iii) Petition to the Court. Petition to the court for obtaining confirmation order for the reduction of capital. Before confining tile reduction, the court will
satisfy itself that reduction of capital does not affect the interests of the creditors and the shareholders adversely. The court will see (a) that sufficient
notice has been given to every person whose interests may be affected by the alteration, (b) that every creditor who objects such reduction, should be
either paid off or, his or her payment should be sufficiently secured or his or her consent has been obtained (c) that the proposed reduction of these capital

is fair and equitable to all kinds of shareholders.
(iv) Confirmation Order Sec. 102] If the court is satisfied in all respects (particularly in regard to objections raised by the creditors), the court lay confirm
the resolution of reduction of share capital on such terms and conditions as it thinks fit. For example, the court may order that the company should add to
its name 'and reduced' for a specified period.
(v) Filing of Order with the Registrar Sec. 103]. A certified copy of the court's confim1ation order together with changed Memorandum should be filed witll
tile Registrar of Companies for registration within three months frolU the date of court's order. The Registrar shall then register the same and issue a
certificate of registration within one month. Reduction will take effect from tile date of registration of order.