What is capital reduction and how it impact share holders.
Capital reduction is a corporate action. Where a company reduces its share capital.It can be done by reducing the face value of shares, cancelling some shares, or returning part of the capital to shareholders. *Capital Reduction* = When a company reduces its share capital / paid-up capital How it can affect shareholders : Face-value reduction: You may keep the same number of shares, but the face value per share decreases. Share cancellation: Some of your shares may be cancelled, reducing the number you own. Capital repayment: You may receive cash from the company for part of your investment. Writing off losses: Usually no immediate cash benefit; the company uses the reduction to clean up accumulated losses. Example Suppose you own 1,000 shares with a face value of ₹10 each. If the company reduces the face value from ₹10 to ₹5: Shares you own = 1,000 New face value = ₹5 Share capital represented = ₹5,000 instead of ₹10,000. Impact on Shareholders: *A. Positive Impacts* 1. *Cleaner Balan...