Distinguish between consolidation of shares and diminution of capital.

This is the process of combining a number of shares to form one larger share whose nominal amount is the aggregate of the shares so consolidated. Under Section 63 (1)(b) of the Act, a company having a share capital may if authorised by its articles consolidate its share capital into shares of larger amount than its existing shares. The consolidation must be authorised by an ordinary resolution and the registrar must be notified within 30 days thereof.
 This is the cancellation of the whole or part of the unissued capital of a company.
 Under Section 63 (1)(e) of the Act a company having a share capital may if authorised by the its articles diminish its capital.
 The articles must prescribe the attendant procedure.

It must be authorised by an ordinary resolution and the registrar must be notified within 30 days.

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