This article summarizes what is company reconstruction, its objectives and the differenct type of company reconstruction.
| Company Reconstruction is: |
- A term used to describe the drastic formal changes in a company’s capital structure as a result of certain circumstances.
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| Type of Reconstruction:- |
- Divided into two(2) types namely
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| Internal Reconstruction:- |
- Undertaken by companies that have surplus capital or companies whose capital has been eroded by trading losses
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- In this type of internal reconstruction, companies who wish to reduce their capital need to comply with certain requirements of their local Companies Act. This normally involves the following:
- The capital reduction scheme must be confirmed by the court
- The articles of association of the company must provide for such reduction of capital and
- A special resolution must be passed by the company
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Three(3) situations where the Companies Act ( in this case
Malaysia) permits such capital reduction:-
- To reduce or write off uncalled capital on any of its shares;
- To cancel paid up capital not represented by assets; or
- To refund any surplus capital ie. Capital in excess of the needs of the company ( a company which has par value of $1 applies to reduce to 50 cent per share so as to refund 50 cent per share to the shareholders )
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on Thursday, October 11th, 2007 at 1:04 pm and is filed under Company Reconstruction.
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October 11th, 2007 at 1:04 pm
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