§ 516 — Reduction of stated capital in certain cases

§ 516. Reduction of stated capital in certain cases.\n (a) Except as otherwise provided in the certificate of incorporation,\nthe board may at any time reduce the stated capital of a corporation in\nany of the following ways:\n (1) by eliminating from stated capital any portion of amounts\npreviously transferred by the board from surplus to stated capital and\nnot allocated to any designated class or series of shares;\n (2) by reducing or eliminating any amount of stated capital\nrepresented by issued shares having a par value which exceeds the\naggregate par value of such shares;\n (3) by reducing the amount of stated capital represented by issued\nshares without par value; or\n (4) by applying to an otherwise authorized purchase, redemption,\nconversion or exchange of outstanding shares some or all of the stated\ncapital represented by the shares being purchased, redeemed, converted\nor exchanged, or some or all of any stated capital that has not been\nallocated to any particular shares, or both. Notwithstanding the\nforegoing, if the consideration for the issue of shares without par\nvalue was fixed by the shareholders under section 504 (Consideration and\npayment for shares), the board shall not reduce the stated capital\nrepresented by such shares except to the extent, if any, that the board\nwas authorized by the shareholders to allocate any portion of such\nconsideration to surplus.\n (b) No reduction of stated capital shall be made under this section\nunless after such reduction the stated capital exceeds the aggregate\npreferential amounts payable upon involuntary liquidation upon all\nissued shares having preferential rights in the assets plus the par\nvalue of all other issued shares with par value.\n (c) When a reduction of stated capital has been effected under this\nsection, the amount of such reduction shall be disclosed in the next\nfinancial statement covering the period in which such reduction is made\nthat is furnished by the corporation to all its shareholders or, if\npracticable, in the first notice of dividend or share distribution that\nis furnished to the holders of each class or series of its shares\nbetween the date of such reduction and the next such financial\nstatement, and in any event to all its shareholders within six months of\nthe date of such reduction.\n