Share Premium Account Reduction

Share premium is the difference between the nominal value of shares issued and the subscription price paid for them. In accounting terms, any share premium must be transferred into a separate share premium account. Whilst share premium is not distributable, it can be reduced or cancelled in the same way as share capital under the Companies Act 2006.

As with a reduction in share capital, the solvency statement route provides a simpler and cheaper way for private companies to reduce their share premium account than obtaining approval from the court. Private limited companies (not public companies) have the option of reducing their share premium account by special resolution supported by a solvency statement made by the directors.

The Share Premium Reduction Subfolder provides template documents for each stage of the process, as required by the Companies Act 2006, including a board resolution and a written resolution, a solvency statement, a statement of capital and a section 644 statement by the directors of the company.

Each document in the Share Premium Reduction Subfolder is compliant with the Companies Act 2006.

Note that these documents relate only to the process of a reduction or cancellation and do not involve a discussion of the accounting treatment of share premium. Specialist accounting advice should be sought if this is required.

Share Premium Account Reduction is part of Corporate Documents. Just £35.00 + VAT provides unlimited downloads from Corporate Documents for 1 year.

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All Making Changes to Share Capital