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How Reduction of Share Capital without sanction of the Tribunal can be initiated?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 kruthika asked over 2 years ago

Hi I am CA student. I am having doubt about company law. May I know, How Reduction of Share Capital without sanction of the Tribunal can be initiated?

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2 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

Surrender of Shares – It means the surrender of shares already issued to the company by the registered holder of shares. Where shares are surrendered to the company, whether by way of settlement of a dispute or for any other reason, it will have the same effect as a transfer in favour of the company and the amount to a reduction of capital. The Companies Act contains no provision for Surrender of Shares. Thus surrender of shares is valid only when Articles of Association provide for the same and: A. Where forfeiture of such shares is justified B. When shares are surrendered in exchange for new shares of same nominal value.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered over 2 years ago

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 surrendered to the company, whether by way of settlement of a dispute or for any other reason, it will have the same effect as a transfer in favour of the company and the amount to a reduction of capital. The Companies Act contains no provision for Surrender of Shares. Thus surrender of shares is valid only when Articles of Association provide for the same and: A. Where forfeiture of such shares is justified B. When shares are surrendered in exchange for new shares of same nominal value. **2. Forfeiture of Shares** – A company may if authorized by its articles, forfeit shares for non-payment of calls and the same will not require confirmation of the court. Where power is given in the Articles, it must be exercised strictly in accordance with the regulations regarding notice, procedure and manner stated therein; otherwise the forfeiture will be void. Forfeiture will be affected by means of Board resolution. **3. Diminution of Capital** – Where the company cancels shares which have not been taken or agreed to be taken by any person.[Section 94(1)(3) ] **4. Redemption of redeemable preference shares** **5. Purchase of shares of a member by the company under Section 402** **6. Buy back of its own shares under Section 77A of companies Act.**

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