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Reduction of Capital Without the Sanction of the Court Research Team | Updated On Monday, November 17,2014, 05:43 PM

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Reduction of Capital Without the Sanction of the Court



Reduction of capital can take place without the sanction of the court in the following cases :

  • Buy back of shares in according to the provisions of Section 77A and 77B.
  • Forfeiture of shares - A company may if approved by its articles forfeit shares for non-payment of calls by the shareholders. Such proceedings sum to reduction of capital but the act does not require court sanction for this purpose.
  • Valid surrender of the shares - A company may admit the surrender of shares.
  • Cancellation of capital - A company may terminate the shares which has not been taken up or agreed to be taken by the person and reduce the amount of its share capital.
  • Buying of shares of member by the company under Section 402B. The Company Law Board may, on request made under Section 397 or Section 398, order the purchase of shares or interest of any member of the company by the company. These provisions come in force when a approved number of members make a complaint to the CLB for mis-management or oppression of the minority shareholders in the company.
  • Redemption of redeemable preference shares, where redeemable preference shares are redeemed, it actually sum to reduction of the capital. But, this does not require the sanction of the court.


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