Ponting Ltd's paid-up capital currently comprises 4 000 000 shares issued fully paid for $14.00.The directors of Ponting Ltd have decided to undertake a capital reduction.
-The directors of Ponting Ltd have decided to reduce capital by a pro rata cancellation of shares.How many shares will be on issue after the capital reduction if capital of $21 000 000 is returned?

Question

Quizplus · Accepted Answer

The total paid-up capital before the reduction is 4,000,000 shares * $14.00 = $56,000,000. If $21,000,000 is returned, the remaining capital is $56,000,000 - $21,000,000 = $35,000,000. Since each share is valued at $14.00, the number of shares after the reduction is $35,000,000 / $14.00 = 2,500,000 shares.

Ponting Ltd's Paid-Up Capital Currently Comprises 4 000 000 Shares