Reduction of capital meaning

This Checklist This Checklist provides points to weigh up when preparing and seeking sign-off for a company voluntary arrangement (CVA) involving the Pension Protection Fund (PPF). It draws on PPF Guidance Note 5 issued in 2018 (see PPF Guidance Note 5: CVAs). When an employing company (or all participating employers in a last man standing scheme) files a CVA proposal with the court, a PPF assessment period begins. Under section 137 of the Pensions Act 2004, the PPF assumes the pension trustees’ voting entitlement (see Practice Note: The Pension Protection Fund—eligibility and entry). In practice, the PPF will typically cast a vote for or against the proposal rather than refrain. The PPF is consistently focused on avoiding any precedent that might allow pension schemes to be diluted where potential PPF entry could arise in the near future (the PPF observes that this has occurred in numerous prior CVAs). The PPF also anticipates that pension trustees will appoint their financial advisers to produce a report addressing the areas of concern...

This Checklist is applicable when acting for the mortgagee in relation to the taking of a ship mortgage and where the security will be registered in the UK. Request a Transcript of Registry from the UK Ship Register to confirm the vessel’s security status. A charge applies for this and for several other documents noted below; the complete schedule can be found on the UK Ship Register website, and a full list is available there. The mortgagee should verify that the owner holds clear, unencumbered legal title to the ship and that their ownership has been correctly recorded, and confirm that it has been properly registered. Perform a Register of Companies search to confirm the owner’s incorporation in England and Wales. Ascertain whether any mortgages or charges concerning the ship are filed against the owner pursuant to Section 859A of the Companies Act 2006 (CA 2006), and confirm registrations relate to the ship...

This Flowchart This flowchart sets out the steps to be followed by any limited company with a share capital—whether public or private—when implementing a reduction of its capital using the court procedure, in accordance with the requirements of the Companies Act 2006. View or print a full-size PDF version:...

Flowchart This diagram explains the necessary steps that are to be taken by a private company limited by shares to implement a reduction of capital via the solvency statement process, in accordance with the Companies Act 2006. View or print a full-size PDF version:...

In this issue: Banking and Finance case round-up Lending Security Debt capital markets Derivatives Regulation for derivatives lawyers Securitisation and structured products Restructuring Technology in banking & finance transactions Regulation for banking lawyers Scotland Daily and weekly news alerts New and updated content Useful information Banking and Finance case round-up Banking & Finance—November 2024 case round-up For a summary of the cases we flagged in Banking & Finance during October 2024, refer to News Analysis: Banking & Finance—November 2024 case round-up. Lending Re KRF Services (UK) Ltd [2024] EWHC 2978 (Ch) The judgment addressed a High Court application for an administration order, heard in that court, and centred on two key points of interest: (i) whether the sole director’s resolution to seek an administration order was effective; and (ii) the effect of the sanctions regime. On the first question, the court examined the company’s unamended Model...

EU financial services developments ECB announces geopolitical risk reverse stress test for 2026 The European Central Bank (ECB) has set out plans to run a geopolitical risk reverse stress test in 2026 across 110 banks under its direct supervision. In this reverse exercise, a fixed outcome, a reduction of at least 300 basis points in CET1, is imposed, with each institution required to specify the circumstances under which such a loss would emerge. Aggregate results to be communicated in summer 2026 According to the ECB, the work will complement the 2025 European Banking Authority stress test, which used a single scenario for all lenders and produced divergent capital drawdowns. The 2026 thematic assessment will have banks evaluate how geopolitical threats might influence their business model. The exercise is designed to gauge how far firms’ stress-testing frameworks incorporate geopolitical exposures, strengthening internal risk management and the capacity to craft appropriate, prudent capital and recovery plans. To limit costs, it will be embedded within banks’ 2026 internal capital...

In this issue: EU fundamentals Competition and state aid Data protection and cybersecurity Financial services Environment Insurance and reinsurance IP Life sciences Regulatory TMT Daily and weekly news alerts New and updated content Trackers EU fundamentals Cyprus Presidency of Council of the EU publishes presidency programme The Cyprus Presidency of the Council of the EU has unveiled its programme for 1 January to 30 June 2026, detailing priorities and direction under the banner ‘An Autonomous Union. Open to the World.’ The presidency’s objective is to fortify the EU’s strategic autonomy and internal cohesion amid rising geopolitical volatility and a more complex global setting, enabling the Union to co‑operate with international partners where feasible while retaining the ability to act independently when required. See: LNB News 15/01/2026 23...

Capital reduction demergers Why a company may undertake a demerger, and the alternative ways such a split can be structured, are explained in Practice Notes: Demergers—an introduction to the tax issues and Demergers—an introduction for corporate lawyers. More detailed Practice Notes examine the tax implications associated with the main demerger routes, namely: statutory (or dividend) demergers, whether direct or indirect—see Practice Note: Statutory demergers liquidation demergers—see Practice Note: Liquidation demergers capital reduction demergers—the focus of this Practice Note In a capital reduction demerger, the top company of the target group reduces its capital; in consideration, the demerged business is moved to a new holding company, which then issues shares to the shareholders. Unlike a statutory demerger, a capital reduction demerger does not benefit from the specific tax reliefs available for exempt distributions. Even so, it can be implemented so that it does not give rise to tax charges—on income or on capital—for the shareholders or for any of...

If a company undertakes a share buyback itself, or via an intermediary acting as the company’s agent, the usual tax position for a UK-resident shareholder is that the transaction is regarded, for UK tax purposes at the time of repurchase, as both: a disposal of their shares for chargeable gains purposes, and the receipt of an income distribution Beyond that, the precise treatment differs slightly according to whether the shareholder is an individual or a corporate owner. For further detail on these differences, see Practice Notes: Tax consequences of share buybacks—main rules and Tax consequences of share buybacks—calculating the income capital split. However, special provisions can apply to repurchases by certain unquoted companies. These rules can prevent any of the consideration from being treated as a distribution in the hands of a particular UK-resident shareholder. Under those provisions, the whole sum received by that shareholder is treated as disposal proceeds for CGT/corporation tax on chargeable gains purposes. The comparative advantages of this—ie...

are capital allowances available to traders. Capital allowances are chiefly available to individuals and other unincorporated entities for new acquisitions. They are not, however, available to anyone carrying on a trade that uses the cash basis. For companies, capital allowances arise only on qualifying capital expenditure on know-how where the acquirer falls outside the corporate intangible assets regime in Part 8 of the Corporation Tax Act 2009 (CTA 2009) in relation to that know-how. This applies where the know-how does not meet the asset or time conditions required to be within CTA 2009, Pt 8. For more detail, see Practice Notes: What is an intangible fixed asset? and What is a pre-FA 2002 asset? ‘Know-how’ is specifically defined as industrial information or techniques likely to aid: manufacturing or processing goods or materials mining agricultural, forestry or fishing operations HMRC does not accept that commercial know-how (i.e. market research, customer lists and sales techniques, etc.) qualifies for know-how allowances, as this...

Company number: [ insert number ] [ insert company name ] LIMITED (the Company ) Statement of directors We, as all of the directors of the Company, provide this statement for the purposes of section 644(5) of the Companies Act 2006 (the CA 2006 )...

Filed on behalf of the Claimant Statement of witness for [ enter initial and surname of witness ] from the [ enter name of printing company ] Order of witness statements: [ enter number of witness statement for this witness, e.g. 'First' ] Exhibit references: [ enter initials and number, e.g. ‘MXW1' ] to [ enter initials and number, e.g. ‘MXW5' ] Date: [ enter date of statement ] Claim No...

Company number : [ insert number ] [ insert company name ] LIMITED (the Company ) SOLVENCY STATEMENT We, being all of the directors of the Company, give this solvency declaration on [ insert date ] for the purposes of section 642 of the Companies Act 2006 and each of us severally...