Companies Act

Buy Back of Shares

S. No. Section 68 (1) Source of Funds for Buy Back Source of funds for Buy back subject to the provisions of sub-section (2), out of—

(a) its free reserves;

(b) the securities premium account; or

(c) the proceeds of the issue of any shares or other specified securities:

Remarks:- No buy-back of shares out of the proceeds of an earlier issue of the same kind of shares. 68 (2) Conditions for Buy back No company shall purchase its own shares or other specified securities under sub-section (1), unless—

(a) the buy-back is authorised by its articles;

(b) a special resolution has been passed at a general meeting of the company authorising the buy-back:

Clause (b) not apply to a case where—

(i) the buy-back is, ten per cent. or less of the total paid-up equity capital and free reserves of the company; and

(ii) such buy-back has been authorised by the Board by means of a resolution passed at its meeting;

(c) the buy-back is twenty-five per cent. or less of the aggregate of paid-up capital and free reserves of the company:

(d) the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back is not more than twice the paid-up capital and its free reserves:

(e) all the shares or other specified securities for buy-back are fully paid-up;

(f) the buy-back of the shares listed on any recognised stock exchange shall be in accordance with the regulations made by the SEBI; and

(g) the buy-back in respect of unlisted shares shall be as per the rules (Annexure-1) as may be prescribed: Provided that no offer of buy-back under this sub-section shall be made within a period of one year reckoned from the date of the closure of the preceding offer of buy-back, if any.

68 (3) Information to be stated in Notice of the meeting The notice of the meeting at which the special resolution is proposed to be passed under clause (b) of sub-section (2) shall be accompanied by an explanatory