Reduction of capital can take place without the sanction of the court in the following cases:-
1.Buy back of shares in accordance to the provisions of Section 77A and 77B
2.Forfeiture of shares – A company may if authorised by its articles forfeit shares for non-payment of calls by the shareholders. Such proceedings amount to reduction of capital but the act does not require court sanction for this purpose.
3.Valid surrender of the shares – A company may accept the surrender of shares
4.Cancellation of capital – A company may cancel the shares which has not been taken up or agreed to be taken by the person and diminish the amount of its share capital.
5.Purchase of shares of member by the company under Section 402B. The Company Law Board may, on application made under Section 397 or Section 398, order the purchase of shares or interest of any member of the company by the company. These provisions come in force when a prescribed number of members make a complaint to the CLB for mis-management or oppression of the minority shareholders in the company.
6.Redemption of redeemable preference shares. Where redeemable preference shares are redeemed, it actually amounts to reduction of the capital. However, this does not require the sanction of the court.