Part V

Share Capital, its Increase, Maintenance and Reduction
Chapter IV

Reduction of Share Capital

Application to court for order of confirmation.
136
1
Where a company has passed a resolution for reducing share capital, it may apply to the court for an order confirming the reduction.
2
If the proposed reduction of share capital involves either—
a
diminution of liability in respect of unpaid share capital; or
b
the payment to a shareholder of any paid-up share capital,
and in any other case if the court so directs, the next three subsections have effect, but subject throughout to subsection (6).
3
Every creditor of the company who —
a
at the date fixed by the court is entitled to any debt or claim which, if that date were the commencement of the winding up of the company, would be admissible in proof against the company, and
b
can show that there is a real likelihood that the reduction would result in the company being unable to discharge his debt or claim when it fell due,
is entitled to object to the reduction of capital.
4
The court shall settle a list of creditors entitled to object, and for that purpose—
a
shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of their debts or claims; and
b
may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction of capital.
5
If a creditor entered on the list whose debt or claim is not discharged or has not determined does not consent to the reduction, the court may, if it thinks fit, dispense with the consent of that creditor, on the company securing payment of his debt or claim by appropriating (as the court may direct) the following amount—
a
if the company admits the full amount of the debt or claim or, though not admitting it, is willing to provide for it, then the full amount of the debt or claim;
b
if the company does not admit, and is not willing to provide for, the full amount of the debt or claim, or if the amount is contingent or not ascertained, then an amount fixed by the court after the like enquiry and adjudication as if the company were being wound up by the court.
6
If a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the court may, if having regard to any special circumstances of the case it thinks proper to do so, direct that subsections (3) to (5) of this section shall not apply as regards any class or any classes of creditors.
Words in s. 136(3) renumbered (6.4.2008) as s. 136(3)(a) by virtue of The Companies (Reduction of Capital) (Creditor Protection) Regulations 2008 (S.I. 2008/719), reg. 2(a) (with reg. 4)
S. 136(3)(b) and preceding word inserted (6.4.2008) by The Companies (Reduction of Capital) (Creditor Protection) Regulations 2008 (S.I. 2008/719), reg. 2(b) (with reg. 4)
Ss. 126-182 repealed (1.10.2009) by Companies Act 2006 (c. 46), ss. 1295, 1300, Sch. 16; S.I. 2008/2860, art. 4, Sch. 1 (with arts. 5, 7, 8, Sch. 2 (as amended by S.I. 2009/1802, art. 18, Sch.))