Firstly the reduction of the capital of a company must be accepted by all the company shareholders and acceptance of this must be signed at the Annual General Meeting.

Once the A.G.M. and signing has taken place the administration will issue a certificate stating that the resolution has been adopted by the company and the shareholders.  It will state particulars of the distribution of the capital to be reduced to the shareholders.

Based on the information in this certificate, a Public Deed stating the reduced capital of the company will be signed by the administration.  Tax, at a rate of 1%, will then be paid on the reduced capital.  This Public Deed will then be presented to the Company House, where the company was originally registered, for them to study and inscribe.

After this process any third party wishing to undertake economic dealings with the company will be able to obtain a simple note from Company House stating that the capital of the company has been reduced and by what proportion.

Reduction of the capital of a company

I have only praise and appreciation for Jose Maria. And here is why.  Like other expats, I am ignorant of how the law operates in Spain; and probably fairly naïve in my dealings with people for whom I am trying to do my best. Shortly after moving to base myself in Andalucia, I re-connected with somebody I had shared a flat with whilst I was at medical school in Aberdeen some twenty-five years ago.  I was concerned about her health and to how she was living, so suggested that we bought a house jointly. We made an informal gentleman´s agreement about what was required and how we would develop a shared space; and went ahead. Of course I should have paid attention to the warning signs, but denial is a powerful human trait and I am very human.  The sharing never did happen, nor was the contract honoured. When I finally summoned the courage to speak out I was met with a hostile reception. Jose Maria had been recommended to me by a good friend; so I made an appointment to see him in Granada. He immediately grasped the essence of what was going on. And gave a clear and precise appraisal of the legal situation and how he would advise me to proceed. He observed that our voluntary agreement was not working, and a more formal agreement would not be legally binding. He advised me to terminate the agreement with all speed as the other party had taken out a mortgage against her share of the house (and the mortgage lender could repossess the entire property if she defaulted). I can honestly say that this though shocking came as no great surprise. And I decided to take his advice. He guided and supported me throughout the whole process which was complicated. I could never have done it unaided and felt totally safe in his hands.
Elisabeth Margareth Scargall. Nerja (Malaga)