What is needed for companies to reduce their capital under the Companies Act?

To reduce capital under the Companies Act, it is necessary for a company to obtain both a special resolution and court approval. A special resolution is required to ensure that the proposed change has substantial support from the shareholders, reflecting a more significant consensus than a simple majority. This requirement is designed to protect minority shareholders and ensure that any decision affecting the capital structure is made with careful consideration.

In addition to the special resolution, court approval is necessary to safeguard the interests of creditors and other stakeholders. The court will review the proposed reduction and assess its implications, ensuring that it does not jeopardize the financial stability of the company or the rights of those affected, particularly creditors. Hence, both components—a special resolution and court approval—are vital in the capital reduction process, making this the correct answer.