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CA2006 reduction of capital

Is it allowable for a private company to transfer its share premium account (with or without any attaching paid up share capital) to Profit & Loss Account? My reading of s. 641 et seq, s. 610 (4), and the Companies (Reduction of Share Capital) Order 2008, SI 2008/1915 reg. 3 (2) suggests that it is, but I'm getting a bit confused! Has anybody done this, or could anybody confirm that it is legal? Thanks

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24th Apr 2014 16:36

CA2006 reduction of capital

It is my understanding that under s.641 of CA2006, it is allowable for a private company to transfer its share premium account (with or without any attaching paid up share capital) to the P&L reserve.

The need for court approval can be avoided provided the directors are prepared to sign a declaration of solvency.

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By TerryD
24th Apr 2014 17:45

Thanks!

Thanks - that's exactly how I read it. Sometimes, though, I get a bit "word blind" trying to follow the legal speak in the Act (and sometimes they do, in fact, tie themselves in knots by trying to be too precise!). Whatever happened to the plain English campaign?

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24th Apr 2014 18:33

The ICAEW have a useful Technical helpsheet regarding Reduction of share capital under S 641 Companies Act 2006.(August 2013) - in plain English and with examples of the bookkeeping!

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By TerryD
25th Apr 2014 10:44

Thanks - but I couldn't find that Help Sheet on ICEAW website. I went through all the usual procedures (getting a new password cos I'd forgotten the old one; entering all the relevant terms in the search box; going to "reduction of share capital" in the legal bit of Technical Resources, spending ages watching the little Catherine wheel go round, etc.) but all I got was some old stuff from 2008. Do you have a link to that document?

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25th Apr 2014 19:22

Hi - the link follows - but you may need to be a member of the Financial Reporting Faculty to be able to view it.

http://www.icaew.com/en/members/advisory-helplines-and-services/technica...

 

 

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By TerryD
28th Apr 2014 11:08

Thanks!

thanks ever so much - that's excellent.

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28th Apr 2014 11:36

I have plenty of experience carrying out capital reductions for companies (both trading and dormant) covering all the cosec paperwork (solvency statements, special resolutions, board minutes, Company House notifications, etc) as well as the bookkeeping and preparing the resultant statutory accounts.

My services are available, let me know if needed - that's my plug as an interim manager!

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