516. Reduction of stated capital in certain cases.(a) Except as otherwise provided in the certificate of incorporation, the board may at any time reduce the stated capital of a corporation in any of the following ways:
(1) by eliminating from stated capital any portion of amounts previously transferred by the board from surplus to stated capital and not allocated to any designated class or series of shares;
(2) by reducing or eliminating any amount of stated capital represented by issued shares having a par value which exceeds the aggregate par value of such shares;
(3) by reducing the amount of stated capital represented by issued shares without par value; or
(4) by applying to an otherwise authorized purchase, redemption, conversion or exchange of outstanding shares some or all of the stated capital represented by the shares being purchased, redeemed, converted or exchanged, or some or all of any stated capital that has not been allocated to any particular shares, or both. Notwithstanding the foregoing, if the consideration for the issue of shares without par value was fixed by the shareholders under section 504 (Consideration and payment for shares), the board shall not reduce the stated capital represented by such shares except to the extent, if any, that the board was authorized by the shareholders to allocate any portion of such consideration to surplus.
(b) No reduction of stated capital shall be made under this section unless after such reduction the stated capital exceeds the aggregate preferential amounts payable upon involuntary liquidation upon all issued shares having preferential rights in the assets plus the par value of all other issued shares with par value.
(c) When a reduction of stated capital has been effected under this section, the amount of such reduction shall be disclosed in the next financial statement covering the period in which such reduction is made that is furnished by the corporation to all its shareholders or, if practicable, in the first notice of dividend or share distribution that is furnished to the holders of each class or series of its shares between the date of such reduction and the next such financial statement, and in any event to all its shareholders within six months of the date of such reduction.
Last modified: February 3, 2019