{"id":174660,"date":"2022-08-17T05:58:51","date_gmt":"2022-08-17T04:58:51","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=174660"},"modified":"2025-07-02T00:40:41","modified_gmt":"2025-07-01T23:40:41","slug":"scheme-of-arrangement-reduce-share-capital","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/scheme-of-arrangement-reduce-share-capital\/","title":{"rendered":"Can I Use a Scheme of Arrangement to Reduce Share Capital in England?"},"content":{"rendered":"

Reducing your company\u2019s share capital is not easy, as there are only a few legal ways to do so. Likewise, the law places significant administrative burdens on company directors. One particular route is through a scheme of arrangement. This article will explain a scheme of arrangement and how you can use it to reduce your company\u2019s share capital in England.\u00a0<\/span><\/p>\n

What is a Scheme of Arrangement?<\/span><\/h2>\n

Schemes of arrangement refer to a court-approved arrangement between a company, its shareholders, and the company\u2019s creditors. Schemes are tools that a company\u2019s key stakeholders can use to restructure or reorder its obligations to its creditors and shareholders.\u00a0<\/span><\/p>\n

While schemes of arrangement are commonly used by companies facing financial difficulties, nothing prevents a perfectly healthy company from using it to reduce its share capital.\u00a0<\/span><\/p>\n

Before we look at the process of using a scheme of arrangement to reduce share capital, we will first consider why a company may want to reduce its capital in the first place.\u00a0<\/span><\/p>\n

Purpose of Reducing Share Capital<\/span><\/h2>\n

Companies reduce their share capital for a variety of reasons, including to:<\/span><\/p>\n