These were inserted by the Companies Amendment Act, The Securities and Exchange Board of India SEBI framed the SEBI Buy Back of Securities Regulations, and the Department of Company Affairs framed the Private Limited Company and Unlisted Public company Buy Back of Securities rules, pursuant to Section 77A 2 f and g respectively.

Objectives of Buy Back: Shares may be bought back by the company on account of one or more of the following reasons i. To increase promoters holding ii.

Buyback

Increase earning per share iii. Rationalise the capital structure by writing off capital not represented by available assets. Support share value v.

To thwart takeover bid vi. To pay surplus cash not required by business Infact the best strategy to maintain the share price in a bear run is to buy back the shares from the open market at a premium over the prevailing market price. A Company cannot buyback its shares or other specified securities out of the proceeds of an earlier issue of the same kind of shares or specified securities.

Conditions of Buy Back a The buy-back is authorised by the Articles of association of the Company; b A special resolution has been passed in the general meeting of the company authorising the buy-back. In the case of a listed company, this approval is required by means of a postal ballot.

The buy back can be made by a Board resolution If the quantity of buyback is or less than ten percent of the paid up capital and free reserves; c The buy-back is of less than twenty-five per cent of the total paid-up capital and fee reserves of the company and that the buy-back of equity shares in any financial year shall not exceed twenty-five per cent of its total paid-up equity capital in that financial year; d The ratio of the debt owed by the company is not more than twice the capital and its free reserves after such buy-back; e There has been no default in any of the following i.

Filing of Declaration of solvency After the passing of resolution but before making buy-back, file with the Registrar and the Securities and Exchange Board of India a declaration of buyback of shares proportionate basis in form 4A.

The declaration must be verified by an affidavit to the effect that the Board has made a full inquiry into the affairs of the company as a result of which they have formed chartered institute of stockbrokers annual conference opinion that it is capable of meeting its liabilities and will not be rendered insolvent within a period of one year of the date of declaration adopted by the Board, and signed by at least two directors of the company, one of whom shall be the managing director, if any: No declaration of solvency shall be filed with the Securities and Exchange Buyback of shares proportionate basis of India by a company whose shares are not listed on any recognized stock exchange.

Issue of further shares after Buy back Every buy-back shall be completed within twelve months from the date of passing the trade binary options reviews who went bankrupt resolution or Board resolution as the case may be.

A company which has bought back any security cannot make any issue of the same kind of securities in any manner whether by way of public issue, rights issue up to six months from the date of completion of buy back.

Buy Back Shares: Meaning, Reasons, Aspects and Other Details

Filing of return with the Regulator A Company shall, after the completion of the buy-back file with the Registrar and the Securities and Exchange Board of India, a return in form 4 C containing such particulars relating to the buy-back within thirty days of such completion.

No return shall be filed with the Securities and Exchange Board of India by an unlisted company. The public announcement shall specify a date, which shall be "specified date" for the purpose of simple forex strategies that work the names of shareholders to whom the letter of offer has to binary options $5000 a week sent.

A public notice shall be given containing disclosures as specified in Schedule I of the SEBI regulations. A draft letter of offer shall be filed with SEBI through a merchant Banker.

The letter of offer shall then be dispatched to the members of the company. A copy of the Board resolution authorising the buy back shall be filed with the SEBI and stock exchanges. The date of opening of the offer shall not be earlier than seven days or later than 30 days after the specified date g.

Meaning of buy back on proportionate basis

The buy back offer shall remain open for a period of not less than 15 days and not more than 30 days. A company opting for buy back through the public offer or tender offer shall open an escrow Account. Penalty If a company makes default in complying with the provisions the company or any officer of the company who is in default shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to fifty thousand rupees, or with both.

The offences are, of course compoundable under Section A of the Companies Act, Legal Service India - Buy Back of shares under the Companies Act, Buy Back of shares under the Companies Act, Written By: G P Sahi, Company Secretary. Legal Advice Find a lawyer Constitutional law Judgments forms PIL family law Cyber Law Law Forum Income-Tax Consumer laws Company laws.

Copyright Online in India Right from your Desktop. Latest Articles Articles Articles Articles Articles Articles Articles Articles Articles Articles The provisions regulating buy back of shares are contained in Section 77A, 77AA and 77B of the Companies Act, Print This Article Concept of Demat Shares Issue of Bonus Shares Buy Back of Shares Share Transfer Restrictions Capital of a Company Dematerialized Securities Shareholders Agreement.

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