Companies Act 2014 section 1252

Reduction of company capital

Section 1252 sets out the rules allowing unlimited companies (ULCs) and public unlimited companies (PUCs) to reduce their company capital by special resolution, and explains the treatment of any reserve arising from such a reduction.

• A ULC or PUC may reduce its company capital in any way it considers appropriate by passing a special resolution, provided this does not conflict with its constitution.
• The reduction may take the form of extinguishing or reducing unpaid share capital liability, cancelling paid-up capital that is lost or no longer backed by assets, or returning excess paid-up capital to members.
• A capital reduction resolution is not valid if it would result in the company having no remaining members.
• Unless the resolution or the company's constitution states otherwise, any reserve created by the capital reduction is treated as a realised profit for all purposes.