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CS Executive · Corporate Accounting and Financial Management · Accounting for Share Capital

Under the Companies Act, 2013, which of the following is NOT a permitted way to reduce share capital, by special resolution and subject to Tribunal confirmation?

Reducing capital while the company is in arrears in repaying accepted deposits or the interest on them is not permitted. The other options, reducing unpaid liability, cancelling lost or unrepresented capital and paying off excess capital, are allowed by special resolution with Tribunal confirmation.

  1. ACancelling paid-up share capital which is lost or unrepresented by available assets
  2. BPaying off paid-up share capital which is in excess of the wants of the company
  3. CReducing liability on shares in respect of capital not paid-up
  4. DReducing capital while the company is in arrears in repaying deposits or interest thereonCorrect

Explanation

Reduction may extinguish or reduce liability on unpaid capital, cancel paid-up capital that is lost or unrepresented by assets, or pay off excess paid-up capital. However, no reduction can be made if the company is in arrears in repayment of deposits it accepted or interest payable thereon.

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