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

Under the Companies Act, 2013 as quoted, which of the following is NOT treated as a reduction of share capital requiring Tribunal confirmation under Section 66?

Cancelling shares that nobody has taken or agreed to take is not a reduction of share capital, per Section 61(2). The other options are reductions under Section 66(1) and need a special resolution and Tribunal confirmation.

  1. ACancelling paid-up share capital that is lost or unrepresented by available assets
  2. BExtinguishing the liability on shares in respect of share capital not paid-up
  3. CPaying off paid-up share capital which is in excess of the wants of the company
  4. DCancelling shares that, on the date of the resolution, have not been taken or agreed to be taken by any personCorrect

Explanation

Section 61(1)(e) allows a company to cancel shares not taken or agreed to be taken by anyone, and Section 61(2) says this is not a reduction of share capital. The other three are the reductions listed in Section 66(1), which need a special resolution and Tribunal confirmation.

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