Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Consolidation definition

What does Consolidation mean? In company law, consolidation (also called a share consolidation or reverse share split) is a share capital reorganisation in which a company combines existing shares into a smaller number of shares with a higher nominal value, typically without changing the aggregate nominal value of the issued share capital or shareholders’ proportional interests (subject to fractional entitlements). Example: five 5p shares become one 25p share. The power to consolidate shares is provided by legislation (Companies Act 2006 in the UK and Companies Act 2014 in Ireland) and is usually exercised by ordinary resolution, with implementation by the board in...

Companies Act 2006: Sub-division and Consolidation of Shares—Authorities, Class Rights, Fractional Entitlements, Companies House Filings, and Listed/AIM Disclosure (UKLRs, DTR 5)

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Practice notes

A limited company with share capital can modify that capital in several ways, provided it follows the Companies Act 2006 (CA 2006). The CA 2006 constraints on altering share capital do not extend to unlimited companies. For more detail on this form of company, see Practice Note: Unlimited companies.

Sub-division and consolidation

Under CA 2006, s 618, a limited company with share capital may split or combine all or some of its shares. Alternatively, share splits and consolidations can be implemented through a court-sanctioned scheme of arrangement under CA 2006, Pt 26, or via a restructuring plan under CA 2006, Pt 26A. A scheme of arrangement is commonly employed to enable mergers and takeovers, or to reorganise a company facing financial distress. A restructuring plan can likewise be used to reorganise a company encountering financial difficulties. For guidance on schemes of arrangement, see Practice Note: Schemes of arrangement—nature and key statutory requirements. For more on restructuring plans, see Practice Note: Part 26A restructuring plans: history, rationale and scope...

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Web page updated on 22/05/2026

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