The reduction of the share capital of a limited liability company is a reverse process in relation to the increase in the share capital, which is one of the methods of financing its activity.
In the practice of business transactions, the reduction of share capital is often a way to regain capital invested by shareholders, or a way for one or several existing partners to leave the company. However, since the reduction of the share capital reduces the company's capitalization and de facto leads to the company's withdrawal of funds previously available at its disposal, the provisions of the Code of Commercial Companies impose a number of obligations regarding this process.
Shareholders most often decide to reduce the company's share capital when they recognize that the property developed by the company is large enough to continue its business operations, and its reduction by a share of own capital will allow shareholders to unfreeze the invested funds.