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Reduction of Share Capital Guide Released by Legal Clarity


Legal Clarity, an innovative legal services company, has today issued an article, including guidance, outlining the circumstances in which a UK company may wish to perform a reduction of share capital, how that reduction of capital can be effected and the necessary procedural steps.

Legal Clarity’s reduction of share capital service ( provides all the documentation and advice a company will need to reduce its share capital. Legal Clarity’s service is tailored to the needs of accountants, entrepreneurs and solicitors. The relevant documents are drafted by Legal Clarity’s team of skilled draftsmen.

James Quinn, Director says:

‘The procedure for a reduction of share capital for a private limited company under the Companies Act 2006 regime is significantly more straightforward than under the Companies Act 1985. This is mainly as a result of the introduction of the solvency statement procedure, as an alternative to the court approved procedure. This simplification allows Legal Clarity to offer an attractive fixed cost service to its customers.’

‘A reduction of share capital has a positive effect on a company’s distributable reserves. Therefore a reduction can be a means of creating or increasing distributable reserves.’

‘A reduction of share capital is often used to reduce or clear accumulated losses, thereby enabling a company to pay dividends.’

‘This new article highlights various situations in which the reduction of share capital procedure can be used, what restrictions are applicable and the procedural steps that need to be taken to comply with the law.’

Legal Clarity provides fixed cost legal services, drafting documentation in line with each client’s specific requirements. It offers a wide range of legal drafting, company secretarial and company formation services through its website ( Free guidance and information relating to various corporate and commercial agreements and procedures are available on its website.


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