Company Reconstruction-Type (Part 1)
August 3rd, 2007
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| Company Reconstruction:- |
| · A term used to describe the drastic formal changes in a company’s capital structure as a result of certain circumstances. |
| Type of Reconstruction:- |
| · Divided into two(2) types namely:
· Internal reconstruction · External reconstruction |
| Internal Reconstruction:- |
| · Undertaken by companies that have surplus capital or companies whose capital has been eroded by trading losses |
| · 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 |
Related Posts
- Internal Company Reconstruction-Capital Reduction By Refunding Surplus Capital To Shareholders (Part B)
- Accounting Treatment For Increase or (Decrease) of Provision For Stock Obsolescence(Part 6)
- Internal Company Reconstruction-Capital Reduction Where Capital Is Not Represented by Available Assets
- Accounting Treatment For The Increase Or (Decrease) Of Provision For Doubtful Debts
- Difference Between Bad Debts Written Off And Provision For Doubtful Debts.
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