Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Reduction of capital definition

What does Reduction of capital mean? A reduction of capital is the process by which a company lawfully decreases its issued share capital and/or related capital accounts (for example, share premium or the capital redemption reserve). In practice, it is used to create distributable reserves (including eliminating accumulated losses to permit dividends), to return surplus capital to shareholders, to facilitate a share buy-back or redemption, or as part of a scheme of arrangement. The concept is regulated by statute rather than defined in a single provision. In the UK, the Companies Act 2006 permits reduction by: - court approval (available to all companies and required for public companies);...

Demerger by Capital Reduction Agreement: Transfer of Subsidiary to NewCo and Allotment of NewCo Shares to HoldCo Shareholders (England and Wales)

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Precedents

STOP PRESS:

A major overhaul of the UK listing framework became effective on 29 July 2024, eliminating the premium and standard listing segments and introducing a single listing category for equity shares issued by commercial companies, replacing the prior segmentation approach across the listing regime. This commercial companies category relies strongly on disclosure and sits alongside other categories, including those for shell companies, secondary listing and closed-ended investment funds. To deliver these reforms, a new UK Listing Rules sourcebook took effect and the former Listing Rules sourcebook was withdrawn. For more detail, see Practice Note: Reform of the UK listing regime—fundamentals. This Precedent represents the position under the listing regime as it stood before 29 July 2024...

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Web page updated on 22/05/2026

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