Corporations Act 2001
If the reduction is an equal reduction, it must be approved by a resolution passed at a general meeting of the company. Special shareholder approval for selective reduction 256C(2)
If the reduction is a selective reduction, it must be approved by either:
(a) a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person who is to receive consideration as part of the reduction or whose liability to pay amounts unpaid on shares is to be reduced, or by their associates; or
(b) a resolution agreed to, at a general meeting, by all ordinary shareholders.
If the reduction involves the cancellation of shares, the reduction must also be approved by a special resolution passed at a meeting of the shareholders whose shares are to be cancelled.256C(3)
The company must lodge with ASIC a copy of any resolution under subsection (2) within 14 days after it is passed. The company must not make the reduction until 14 days after lodgment.
Note: A proprietary company may also have to notify certain particulars under Part 2C.2 .
[ CCH Note: S 256C(3) will be amended by No 69 of 2020, s 3, Sch 1, by substituting " the Registrar " for " ASIC " , (effective 22 June 2022 or a day or days to be fixed by Proclamation).]
The company must include with the notice of the meeting a statement setting out all information known to the company that is material to the decision on how to vote on the resolution. However, the company does not have to disclose information if it would be unreasonable to require the company to do so because the company had previously disclosed the information to its shareholders. Documents to be lodged with ASIC 256C(5)
Before the notice of the meeting is sent to shareholders, the company must lodge with ASIC a copy of:
(a) the notice of the meeting; and
(b) any document relating to the reduction that will accompany the notice of the meeting sent to shareholders.
[ CCH Note 1: S 256C(5) will be amended by No 69 of 2020, s 3, Sch 1 and [ 574], by substituting " the Registrar " for " ASIC " in the heading and " the Registrar " for " ASIC " , (effective 22 June 2022 or a day or days to be fixed by Proclamation).]
[ CCH Note 2: S 256C(6) will be inserted by No 69 of 2020, s 3, Sch 1 [ 575] (effective 22 June 2022 or a day or days to be fixed by Proclamation). S 256C(6) will read:
Lodgement of a document with the Registrar under this section must meet any requirements of the data standards.]
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