Our company have arranged to purchase some minority shares. All necessary legal documents prepared etc. My question is about the called up and paid share capital. Does a purchase of own shares automatically lead to a reduction of share capital by the nominal amount purchased. CH form SH03 is being sent in after stamping.
My feeling is that it would - but I have no prior experience to base this on,
Thanks.
Replies (3)
Please login or register to join the discussion.
POOS
Clue: the company purchases the shares, and then the shares purchased are cancelled.
Before that happens, say, there are 100 x £1 shares in issue, after it happens there are, say, 90 x £1 shares in issue.
I think the issued share capital has reduced. I do not think you need prior experience to think so.
Not automatically
I agree with Portia that it is not so much the purchase of the shares, but the subsequent cancellation of the shares in accordance with s.706(b) CA 2006 that results in the issued share capital being reduced.