What is required for a public company to reduce its share capital?

To reduce its share capital, a public company must typically obtain both a special resolution and court confirmation.

The requirement for a special resolution involves the shareholders of the company voting to approve the reduction. This process allows the shareholders to express their agreement with the rationale behind the capital reduction, which could be for various reasons such as returning surplus capital to shareholders, eliminating accumulated losses, or optimizing capital structure.

Following the approval by shareholders through the special resolution, the company must seek court confirmation. This is primarily to protect the interests of creditors and ensure that the reduction does not impair the company's ability to meet its obligations. The court assesses whether the proposed reduction would adversely affect the company's creditors and whether there are any justifiable grounds for the reduction.

Both steps are crucial; the special resolution ensures shareholder consent and the court confirmation provides additional oversight to safeguard creditor interests, which is particularly important for public companies given their broader range of stakeholders. This combination reflects the regulatory framework designed to maintain the integrity of public companies and protect their creditors during structural financial changes.