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Buy Back of Shares2019-06-02T09:28:22+05:30

Last updated: 09/05/2019 15:40:02

BUY- BACK OF OWN SHARES OR ANY OTHER SECURITIES BY AN UNLISTED COMPANY

Conditions to be satisfied before making Buy-back

The company must meet all the requirements for buy-back:

  1. The buy-back shall be made from any one or the combination of
    • Free Reserves,
    • Security premium account
    • Proceeds of any issue of any shares or securities.
  2. The maximum buy-back can be up to 25% of the aggregate of paid-up equity capital and free reserves. (see note 1).
  3. The ratio of secured and unsecured debts after buy-back shall not be more than 2X paid-up capital and free reserves.
  4. All shares must be fully paid-up for buy-back purpose.
  5. Buy-back shall be completed within 1 year from the date of passing the resolution ( BR or SR)

 

NO buy-back of own shares or other specified securities:

  • if AOA (Articles of associations) does not authorise. (see note 2)
  • shall be made out of the proceeds of an earlier issue of the same kind of shares or securities. (see note 3)
  • through any subsidiary company including its own subsidiary.
  • through any investment company or companies.
  • if any default is made by the company in paying any of the following. (see note 4)
    1. Interest or loan payable to any bank
    2. Redemption of debentures
    3. Redemption of preference shares
    4. Payment of any dividend to any shareholders
  • if not complied with the below provisions:
    1. Annual return
    2. Financial statements
    3. Failure int he distribution of dividend
    4. Declaration of dividend

Note:

  1. Free reserves include security premium account.
  2. If AOA does not authorise then amend the AOA of the company.
  3. Except for the way of issue of bonus shares.
  4. The buy-back can be done if the 3 years has elapsed after such default.
PRIVATE LIMITED COMPANY REGISTRATION
COMPANY CONVERSION

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