CAPITAL AND SHARES 
35 
for an order confirming the reduction (ss. 55, 56). The 
power to reduce may be exercised in any way whatever 
[see Poole v. National Bank of China (1907), A.C. 229], 
although the Act particularises three ways, namely (a) by 
extinguishing or reducing the liability on any of its shares 
in respect of share capital not paid up; (b) either with or 
without extinguishing or reducing liability on any of its 
shares by cancelling paid-up capital which has been lost or 
is unrepresented by available assets; and (c) either with or 
without extinguishing or reducing liability on any of its 
shares, by paying off any paid-up share capital which is in 
excess of the wants of the company (s. 55). 
In certain instances there is a practical reduction which can 
be effected without the sanction of the Court, e.g. by for- 
feiture of shares or by surrender (see Chapter IX). S. 40 
of the Act of 1908, which gave power to pay off paid up capital 
out of accumulated profits was repealed by the Act of 1928. 
Where the articles of a company, as originally framed, or 
as altered by special resolution, authorise it, shares not taken 
or agreed to be taken may be cancelled, and the nominal 
capital thus reduced without application to the Court (s. 50). 
If the original articles do not give the power they must first 
be altered in the usual way by special resolution, and the 
special resolution for reduction subsequently passed [Patent 
Invert Sugar Co. (1886), 31 Ch. D. 166]. A power to reduce 
contained only in the memorandum is ineffective (re Dexine 
Co. (1903), W.N. 82]. The precise procedure to be adopted 
to effect a reduction depends upon whether or not the re- 
duction involves either the diminution of liability in respect 
of unpaid capital, or the return to shareholders of paid-up 
capital. If either of these is involved, creditors are clearly 
affected and may object [s. 56 (2)]; but in the more common 
case where paid-up capital has been lost, or is unrepresented 
by available assets, creditors are not prejudiced, and in such 
cases, and indeed in any case other than the two cases speci- 
fically mentioned in s. 56 (2), can only object if the Court so 
allows. 
The petition is supported by affidavit evidence. An 
affidavit by the chairman of directors commonly sets out 
the history of the company, and the circumstances leading 
to the present position; whilst the secretary should depose 
to the due calling of the meetings of the company. In 
the case where the reduction is sought to be effected on 
the ground of capital lost or unrepresented by available 
assets, evidence of the loss should always be adduced [Caldwell 
v. Caldwell (1916), W.N. 70].