Question: In which case can Joint Stock company reduce capital?
I. Legal grounds:
II. Answer:
Joint stock company may reduce their charter capital under the following methods:
Case 1: The company returns part of the stakes to shareholders in proportion to their holding
Provided that:
- The company has continued its business operation for more than 02 years from the business registration date
- This must be approved by the General Meeting of Shareholders
- The company must ensure that: All debts and liabilities can be paid after the return
Case 2: The company redeemed the shares issued at the request of Shareholders
Provided that:
- The Company undertakes to reorganize the company or change the rights and obligations of shareholders as stipulated in the Charter of the Company. Shareholders vote against this resolution and request the company to buy back his shares.
- The acquisition of shares must be approved by the Board of Management (If the number of shares is not more than 10% of the total number of shares of the Company) or the General Meeting of Shareholders (If the number of shares is greater than 10% total number of shares of the Company).
- The company ensures that after the payment of the purchased shares, all debts and liabilities can be paid
Case 3: The company repurchases issued shares
Provided that:
- The acquisition of shares must be approved by the Board of Management (If the number of shares is not more than 10% of the total number of shares of the Company) or the General Meeting of Shareholders (If the number of shares is greater than 10% total number of shares of the Company).
- The company ensures that after the payment all of the purchased shares, all debts and liabilities can be paid
Case 4: Charter capital is not contributed fully and punctually by members
Provided that:
- Over 90 days from the issuance date of the Certificate of Business Registration, shareholders have not fully paid for the registered shares
