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Capital Reduction

  • Capital Reduction
  • Strike Off
  • MVL
Home Routes to Closure Capital Reduction

Summary

The process of returning funds to shareholders through share cancellations and share purchases.

Suitability

  • Private limited company
  • Significant issued share capital
  • Need to return capital to shareholders

Process

  • All directors make a solvency statement that the company will be able to pay its debts as they fall due within twelve months
  • Shareholders pass a special resolution

Directors Risk

  • Liability and responsibilities of directors continues

Limitation Period to Restore

  • N/A

Cost

  • Low cost to draft resolutions and solvency statement

Pros

  • Straightforward so can be carried out by management
  • Less costly than liquidation
  • Allows limited companies to repay excess share capital
  • Not reliant upon the court
  • Increases distributable reserves thereby easing restrictions on up streaming dividends through the group

Cons

  • Requires subsequent strike off or MVL to close company
  • Liability and responsibilities of directors continues
  • A level of due diligence remains appropriate (i.e. on the adequacy of the assets against the liabilities of the company)
  • Tax advice required

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    • Why Simplify Your Structure?
    • Routes to Closure
    • Our ADAPT Model
    • Why mlm Solutions?
    • Get in Touch
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    • Get in Touch
    • Home
    • Our ADAPT Model
    • Routes to Closure
      • Capital Reduction
      • MVL
      • Strike Off
    • Why mlm Solutions?
      • Our Approach to Fees
      • Our Team
    • Why Simplify Your Structure?
    Simplify Your Structure