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TMI BlogFINANCIAL RESTRUCTURING - REDUCTION OF SHARE CAPITALX X X X Extracts X X X X X X X X Extracts X X X X ..... Necessity for injecting more working capital to meet the market demand for the company s products or services. When the company is unable to meet its current commitments When the company is unable to obtain further credit from suppliers of raw materials, consumable stores, brought out components etc. and from other parties like those doing job work for the company. When the company is unable to utilize its full production capacity for lack of liquid funds. Restructuring of under capitalized company An undercapitalized company may restructure its capital by taking one or more of the following corrective steps : Injecting more capital whenever required either by resorting to rights issue/ prefere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in respect of share capital not paid-up; (b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost, or is unrepresented by available assets; or (c) either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company; and may, if and so far as is necessary alter its memorandum by reducing the amount of its share capital and of its shares accordingly. Reduction of Share Capital without sanction of the Tribunal : 1. Surrender of Shares It means the surrender of shares already issued to the company by the registered holder of shares. Where shares are s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... register where he has reasonable cause to believe that a company is not carrying on business or in operation. Reduction of Capital of Unlimited Company An unlimited company to which Section 100 of Companies Act does not apply can reduce its capital in any manner that its MOA and AOA allow. It is not governed by Section 94 and 100 of Companies Act. Creditors Right to obtain to Reduction The creditors having a debt or claim admissible in winding up are entitled to object. To enable them to do so, the Court will settle a list of creditors entitled to object. If any creditor objects, then either his consent to the proposed reduction should be obtained or he should be paid off or his payment be secured. The Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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