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Companies Ordinance Cap 32

Section Num: 58     Version Date 13/02/2004

Special resolution for reduction of share capital

Reduction of Share Capital

(1) Subject to confirmation by the court, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorized by its articles, by special resolution reduce its share capital in any way, and in particular, without prejudice to the generality of the foregoing power, may-

(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up; or

(b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company,

and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

(1A) Except as provided in this Ordinance, no company limited by shares or limited by guarantee and having a share capital shall purchase or subscribe for any shares in the company or reduce its share capital in any way; and this subsection shall apply as if any share premium account or capital redemption reserve fund of a company were paid up share capital of the company.  (Added 6 of 1984 s. 28)

(1B) If a company purports to act in contravention of subsection

(1A),-

(a) the company is liable to a fine;

(b) every officer who is in default is liable to imprisonment and a fine; and

(c) a relevant shareholder within the meaning given in the Thirteenth Schedule who knowingly permits the contravention of subsection

(1A) is liable to imprisonment and a fine.  (Added 77 of 1991 s. 5)

(1C) Subject to section 168A, if a company purchases any shares in itself under sections 49 to 49S, no such purchase shall be void by reason only of a failure to comply with any of those provisions.  <* Note - Exp. X-Ref.: Sections 49, 49A, 49B, 49BA, 49C, 49D, 49E, 49F, 49G, 49H, 49I, 49J, 49K, 49L, 49M, 49N, 49O, 49P, 49Q, 49R, 49S *>  (Added 77 of 1991 s.

5. Amended 28 of 2003 s. 27)

(1D) Notwithstanding subsection (1C), a purchase which contravenes section 49B(6) is void.  (Added 77 of 1991 s. 5)

(2) A special resolution under this section is in this Ordinance referred to as a resolution for reducing share capital.

(3) Confirmation by the court of a reduction of the share capital of a company is not required under subsection (1) if the sole purpose of the reduction is to re-designate the nominal value of the shares of the company to a lower amount and the following conditions are satisfied-

(a) the company has only one class of shares;

(b) all issued shares are fully paid-up and the amount of the net assets of the company is not less than its paid-up share capital;

(c) the reduction applies to and affects all shares equally;

(d) the amount arising from the reduction is not less than an amount representing the difference between the amount of the company's fully paid-up share capital immediately before the reduction and the amount of its fully paid-up share capital immediately after the reduction;

and

(e) the amount arising from the reduction is credited to the share premium account of the company.  (Added 28 of 2003 s. 27)

(4) In this section, "net assets" (²b¸ê²£), in relation to a company, has the same meaning as in section 157HA(15).  (Added 28 of 2003 s. 27)

[cf. 1929 c. 23 s. 55 U.K.; cf. 1985 c. 6 s. 143 U.K.]

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