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CMA Final · Corporate Financial Reporting · Internal Reconstruction (Capital Reduction)

Under Section 66(7) as quoted, after a reduction of share capital is confirmed, a member's liability on a share is limited to which amount?

A member's liability for calls is capped at the difference, if any, between the amount paid or deemed paid on the share after reduction and the share's amount as fixed by the Tribunal's reduction order.

  1. AThe difference, if any, between the amount paid or deemed paid on the share after reduction and the amount of the share as fixed by the order of reductionCorrect
  2. BThe full original face value of the share before reduction
  3. CThe amount of reduction per share
  4. DNil in all cases

Explanation

Section 66(7) says a member is not liable to any call exceeding the difference, if any, between the amount paid (or deemed paid) on the share and the amount of the share as fixed by the order of reduction. The original face value and reduction amount are not the measure.

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