Reduction of capital: solvency statement
A practice note setting out an overview of the process for a private company in England and Wales to reduce its capital using the solvency statement procedure. Introduced by the Companies Act 2006, this procedure serves as an alternative to the court-approved method, which remains mandatory for public companies. This note outlines the key steps involved, including the requirement for a directors' solvency statement and shareholder approval by special resolution, explores when a company might use the procedure and what the directors should consider before making the solvency statement. Further, this practice note examines the requirements for class consents, the form of the solvency statement and the necessary filings with Companies House to effect the reduction.
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