Section 66 of the Companies Act, 2013, discussed earlier here, was notified on 7th December 2016 with effect from 15th December 2016. Central Government on 15th December 2016 notified the National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016 with effect from even date. In this post we will discuss the same. Continue reading
Tag Archives: Reduction of share capital
Purchase of own shares by a company is possible but for legal restrictions.
Restriction on purchase by company or giving loan for purchase of its shares (Section 67):
A company limited by shares or a company limited by guarantee and having share capital shall have no power to by its own shares unless the consequent reduction of share capital is effected under the provision of this Act.
Reduction of capital is a sensitive issue; managerially, financially, economically, and legally. Hence, reduction of capital by a company is always subject to confirmation by the Tribunal on an application made by the company. Company applying for reduction may either be a company limited by share or a company limited by guarantee but having a share capital. Reduction of capital must be approved by special resolution passed by the company. a company may reduce share capital in following manner –