Share Premium Account Reduction Templates

Overview

Share premium is the difference between the nominal value of shares and the price paid for them. In accounting terms, this amount must be credited to a separate share premium account. Although share premium is not directly distributable, it can be reduced or cancelled using the same Companies Act 2006 procedures that apply to a reduction of share capital.

As with a share capital reduction, the solvency statement route offers a simpler and cheaper route for a private company than applying to court. A private limited company (not a public company) can reduce its share premium account by passing a special resolution supported by a solvency statement made by the directors.

This section brings together the core templates for a share premium account reduction using the solvency statement route, including board approvals, shareholder approvals, the solvency and section 644 statements, and the Companies House filing.

When to Use These Templates

Best for:

Private limited companies wishing to reduce or cancel share premium using the solvency statement route
Restructuring the company’s equity and balance sheet where appropriate professional advice supports that approach
Aligning the share premium position with the company’s current capital and funding structure

Each template in this section is drafted to be compliant with the relevant Companies Act 2006 requirements for this procedure.

Note: these templates deal with the legal process for reducing or cancelling share premium. They do not cover the accounting treatment. Specialist accounting advice should be taken where needed.

What this section covers

Guidance on the legal procedure for reducing a share premium account
Board resolutions to approve the use of the solvency statement route and recommend the reduction
A written resolution and general meeting minutes to pass the special resolution
The directors’ solvency statement and section 644 statement
The Companies House filing (form SH19) and a covering letter

🔀 Document Toolkit: Typical Sequence (may vary)

Step 1 - Understand the procedure and conditions

Start with Share Premium Account Reduction – Guidance Notes.
These explain how the solvency statement route works for reducing share premium, when it can be used and the key steps and filings involved.

Step 2 - Board approval and directors’ statements

Use Board Resolutions – Share Premium Reduction to record the directors’ decision to recommend and implement a share premium reduction using the solvency statement route.
Prepare and approve the directors’ statements using:
Solvency Statement – Share Premium Reduction; and
Section 644 Statement by Directors – Share Premium Account Reduction.

Step 3 - Shareholder approval

Obtain member approval for the reduction by passing a special resolution using either:

Written Resolution – Share Premium Reduction (for a written resolution procedure); or
General Meeting Minutes – Share Premium Reduction (where the resolution is passed at a general meeting).

Step 4 - Filing at Companies House

File the required documents at Companies House, typically including:

Companies House Form SH19;
Section 644 Statement by Directors – Share Premium Account Reduction; and
Solvency Statement – Share Premium Reduction, as required.
Use Letter to Companies House – Share Premium Account Reduction as the covering letter for the filing.

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