ICAEW BL · Chapter 9 · Question 10 of 10
Ashby plc, a public company, wants to reduce its share capital to eliminate accumulated losses. Under the Companies Act 2006, what must it do?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Pass a special resolution and obtain the court's confirmation of the reduction
Explanation
Under s641 Companies Act 2006, a company limited by shares may reduce its share capital by special resolution confirmed by the court. Only a private company has the alternative of a special resolution supported by a solvency statement made by all the directors, without going to court (s641(1)(a) and s642). Ashby plc is a public company, so it must use the court route, where the court considers the interests of creditors. An ordinary resolution or a board resolution is never sufficient.
More Share capital, loan capital and capital maintenance MCQs
- Q2Larchmont Ltd plans to issue new ordinary shares to Ingrid in exchange for a piece of land she owns. An existing shareholder claims the…
- Q3Corrie Ltd issues 40,000 ordinary shares with a nominal value of 25p each at a price of £1.40 per share, fully paid in cash. What amount…
- Q4Penrose Ltd, a private company, has the following figures: accumulated realised profits brought forward £120,000; realised profit for the…
- Q5Ashcombe plc, a public company, has called-up share capital of £400,000, a share premium account of £100,000 and retained earnings of…
- Q6Thornbury Ltd grants a fixed charge over its warehouse to a lender. The lender's solicitor forgets to deliver the charge for registration…