12 - Capital Maintenance

• Who are concerned about the reduction of share capital?

  Creditors
• The CA 2006 provides for two methods to reduce capital:

  • special resolution followed by court confirmation; and

  • special resolution followed by solvency statement.
• Which companies can use the special resolution and court confirmation to reduce their share capital?

  Private and Public
• A public company can only issue redeemable shares if authorised to do so by its Articles
• The two types of purchase of own shares are: a market purchase and an off-market purchase.
• The provision of prohibited financial assistance constitutes a criminal offense by the company and every officer. There are also civil offenses.
• A distribution is defined as 'every description of distribution of a company's assets to its members, whether in cash or otherwise'.
• What usually provides that the members 'declare' a final dividend?

  The Articles
• Where is it usually provided that directors can pay out an interim dividend without member consent?

  The Articles
• What resolution is required usually for the members to 'declare' the final dividend?

  Ordinary
• Where can a dividend not be paid out of?

  Capital
• What do dividends need to make reference to?

  Relevant Accounts
• The standard method of paying a dividend is sending a dividend warrant to each member.