Share Capital

Reduction of share capital supported by a solvency statement

From £275+VAT

A company limited by shares can reduce its share capital by special resolution when supported by a solvency statement, as long as the reduction in share capital does not cause only redeemable shares being held. At BTC, we will prepare ready for submission to Companies House the following as part of our reduction of share capital service:

• Draft minutes of the directors' meeting recommending the reduction in share capital,
• A copy of the special resolution of members authorising the process,
• A copy of the solvency statement of the directors’ in accordance with sections 642(1)(a) and 643 of the Companies Act 2006;
• A statement of capital of the company; and
• A statement of compliance by the directors.

What is the Statement of Compliance by the Directors?

This document confirms that the company has made a copy of the solvency statement available to each eligible member and that the solvency statement was not made more than 15 days before the company's members passed the resolution. Each of the company's directors must then sign this statement of compliance.

Redemption of Shares

From £100+VAT

If a company limited by shares has issued redeemable shares, they can be be redeemed in accordance with the redemption terms. The terms, if authorised either by the company’s Articles of Association or by a resolution, may be set by the company directors. Otherwise, the terms must be detailed in the company’s Articles of Association. If shares are being redeemed in the company, an "SH02" must be sent to Companies House within a month of the date of redemption. The SH02 includes a new statement of capital.

We can assist with this process and prepare the relevant documents ready for submission to Companies House:

• The board minutes of the meeting of directors approving the redemption;
• Companies House form SH02, and
• A statement of capital

Company Purchase of Own Shares

From £250+VAT

As long as there are no restrictions in the company's Articles of Association, and with the approval of its shareholders, a company may purchase shares in the company. However, as with any share capital reduction, the company may not purchase its shares if it results in only redeemable shares being in issue.

The process of a company purchasing its own shares causes those shares to be cancelled. For all private companies and most public companies, these shares are cancelled immediately and the company must deliver an SH03 to Companies House. The SH03 includes the company's new statement of capital.

If the consideration for the shares is above £1,000, the SH03 must be stamped by HMRC before submission to Companies Houss.

Subject to the company's Articles of Association, BTC staff will prepare ready for submission;

• A sale and purchase agreement between the Company and the seller,
• Minutes of the board of directors' meeting in which the purchase is recommended,
• Written resolution of members approving the purchase,
• Companies House form SH03,
• A Statement of Capital, and
• Advice on the value of stamp duty payable, if applicable

HMRC Application For Advance Clearance Under S225 ICTA 1988

From £250+vat

When a company makes a purchase of own shares which involves a payment in excess of the capital originally subscribed for the shares, the excess constitutes a distribution. However, such a payment is treated as not giving rise to a distribution if, among other conditions, the purchase is made wholly or mainly to benefit a trade carried on by the company. Advance clearance of the treatment is required in some instances.

BTC tax specialists will make the application to HMRC on your behalf for the purchase of share as falling within Section219(1)(a), for the payment is be treated as a capital distribution.