Companies Act 2006, section 646

Creditors entitled to object to reduction

Part 17 A company's share capital

(1)Where this section applies (see section 645(2) and (4)), every creditor of the company who

[F938 (a)F938] at the date fixed by the court is entitled to any debt or claim that, if that date were the commencement of the winding up of the company would be admissible in proof against the company, [F939 and

(b)can show that there is a real likelihood that the reduction would result in the company being unable to discharge his debt or claim when it fell due,F939]

is entitled to object to the reduction of capital.

(2)The court shall settle a list of creditors entitled to object.

(3)For that purpose the court—

(a)shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of their debts or claims, and

(b)may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction of capital.

(4)If a creditor entered on the list whose debt or claim is not discharged or has not determined does not consent to the reduction, the court may, if it thinks fit, dispense with the consent of that creditor on the company securing payment of his debt or claim.

(5)For this purpose the debt or claim must be secured by appropriating (as the court may direct) the following amount—

(a)if the company admits the full amount of the debt or claim or, though not admitting it, is willing to provide for it, the full amount of the debt or claim;

(b)if the company does not admit, and is not willing to provide for, the full amount of the debt or claim, or if the amount is contingent or not ascertained, an amount fixed by the court after the like enquiry and adjudication as if the company were being wound up by the court.

Read section 646 in the full Act → Definitions (2) Cases (6)

Definitions used in section 646

company

“company” means a company formed and registered under this Act, that is—

(a)

a company so formed and registered after the commencement of this Part, or

(b)

a company that immediately before the commencement of this Part—

(i)

was formed and registered under the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)), or

(ii)

was an existing company for the purposes of that Act or that Order,

(which is to be treated on commencement as if formed and registered under this Act).

Defined in s.1(1) · see it in the full Act

(4) In this section and that Schedule “company” includes any body corporate.

Defined in s.1159(4) · see it in the full Act
the court

(1) Except as otherwise provided, in the Companies Acts “the court” means—

(a)in England and Wales, the High Court or the county court;

(b)in Scotland, the Court of Session or the sheriff court;

(c)in Northern Ireland, the High Court.

Defined in s.1156(1) · see it in the full Act

(2) The provisions of the Companies Acts conferring jurisdiction on “the court” as defined above have effect subject to any enactment or rule of law relating to the allocation of jurisdiction or distribution of business between courts in any part of the United Kingdom.

Defined in s.1156(2) · see it in the full Act

Cases considering section 646 (6)

Diversified Energy Company Plc, Re

[2025] EWHC 3081 (Ch) · 21 November 2025

The court relied on satisfaction of the no real likelihood test in section 646(1)(b) when confirming that creditors would not be prejudiced by the reduction. (see para [36])

IN THE MATTER OF INVESTEC PLC

[2022] EWHC 1679 (Ch) · 19 May 2022

Applies the no-real-likelihood-of-creditor-prejudice test. The court accepted the earlier conclusion that the test was satisfied and found no reason to revisit it (see para [40]).

Old Mutual Plc, Re

[2018] EWHC 873 (Ch) · 20 April 2018Defines

Identifies creditors with debts or claims admissible in proof in a winding up as potential objectors to a reduction. The court assessed the Company’s known and contingent liabilities on that basis. (see paras [75], [78]-[84]) Applies the requirement that a creditor show a real likelihood that the reduction would cause inability to discharge the debt when due. The retained assets, liquidity and 10 per cent margin meant the test was not realistically satisfied. (see paras [75], [87]-[96])

What each judgment says about section 646 is in the case-law panel in the full Act.

Amendments and notes

2 notes from legislation.gov.uk

Amendments

  1. F938Words in s. 646(1) inserted (1.10.2009) by The Companies (Share Capital and Acquisition by Company of its Own Shares) Regulations 2009 (S.I. 2009/2022), reg. 3(a)
  2. F939S. 646(1)(b) and word inserted (1.10.2009) by The Companies (Share Capital and Acquisition by Company of its Own Shares) Regulations 2009 (S.I. 2009/2022), reg. 3(b)