CS UPDATES

A PLATFORM FOR CS STUDENTS

For Solved papers, videos, notes and updates
Follow us on https://t.me/csupdates

And join our Discussion Group https://t.me/csupdatesgroup

Follow us on Instagram at https://instagram.com/csupdates18
ARTICLE CREATED & INTERPRETED BY PRANIT PONKSHE ABOUT BUY-BACK OF SHARES AS
PER COMPANIES ACT, 2013:-

# MEANING:-

BUY-BACK MEANS PURCHASE OF OWN EQUITY SHARES, PREFERENCE SHARES & SPECIFIED
SECURITIES BY THE COMPANY.

# LEGAL PROVISION:-

SECTION 68, 69, 70 OF THE COMPANIES ACT, 2013.

RULE 17 OF COMPANIES (SHARE CAPITAL AND DEBENTURES) RULES, 2014.

SEBI ( LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 IS ONLY

APPLICABLE TO LISTED COMPANIES.

# SOURCES/PATMENT TO SHAREHOLDERS & SECURITY HOLDERS FROM:-

1. FREE RESERVES ( SECTION 2 (43) OF COMPANIES ACT, 2013)- IT DOES NOT INCLUDE NOTIONAL &
UNREALISED GAIN, REVALUATION RESERVES etc.

2. SECURITIES PREMIUM AMOUNT.

3. YIELDS/PROCEEDS FROM ISSUE OF SHARES & OTHER SECURITIES BUT NOT FROM THE EARLIER
ISSUE OF SAME KIND SHARES & SECURITIES.

# LIMITS FOR/OF BUY-BACK:-

1.BY BOARD RESOLUTION:-

IF BUY-BACK IS 10% OR LESS THAN THAT OF TOTAL PAID-UP EQUITY SHARE CAPITAL + FREE
RESERVES.

2. BY SPECIAL RESOLUTION AT GENERAL MEETING:-

IF IF BUY-BACK IS MORE THAN 10% THAT OF TOTAL PAID-UP EQUITY SHARE CAPITAL + FREE
RESERVES BUT NOT MORE THAN 25% AGGREGATE PAID-UP CAPITAL + FREE RESERVES.

IN ANY FINANCIAL YEAR IT SHALL NOT BE MORE THAN 25% OF TOTAL PAID-UP EQUITY CAPITAL.

# RATIO MAINTAINANCE:-

1. OTHER THAN GOVERNMENT COMPANY:-

THE AGGREGATE DEBTS (SECURED + UNSECURED) OWNED BY COMPANY AFTER BUY-BACK SHOULD
NOT MORE THAN TWICE OF PAID-UP CAPITAL + FREE RESERVES.

2. FOR GOVERNMENT COMPANIES INVOLVED IN NON-BANKING FINANCE INSTITUTION & HOUSING

FINANCE ACTIVITIES:-
MINIMUM DEBT TO PAID-UP CAPITAL & FREE RESERVES RATIO = 6:1 (AS PER NOTIFICATION
10/03/2016).

# FROM/ROUTED THROUGH:-

1. EXISTING SHAREHOLDERS OR SECURITY HOLDERS.

2. OPEN MARKET.

3. SCHEME OF SWAET EQUITY SHARES.

4. SCHEME OF STOCK OPTION.

# FORMS INVOLVED IN BUY-BACK:-

MGT-14:- IF BUY-BACK IS TROUGH SPECIAL RESOLUTION.

SH-8:- LETTER OF OFFER FILED WITH ROC IF BUY-BACK IS TROUGH SPECIAL RESOLUTION.

SH-9 :- DECLARATION OF SOLVENCY. (SIGNED BY MIN 2 DIRECTORS & 1 OF THEM SHALL BE MD).

SH-11 :- RETURN OF BUY-BACK. (FORM SH-15 SHOULD BE ATTACHED WITH FORM SH-11)

# IMPORTANT RULES/PROVISIONS W.R.T.BUY-BACK:-

1. ARTICLES OF ASSOCIATION (AOA) MUST HAVE PROVISION FOR BUY-BACK OF SHARES.

2. SHARES MUST BE FULLY PAID-UP.

3. THE BUY-BACK PROCEDURE SHOULD BE COMPLETED WITHIN 1 YEAR FROM THE DATE OF
RESOLUTION ( BOARD OR SPECIAL RESOLUTION).

4. FILING OF DECLARATION SOLVENCY WITH SEBI IS ONLY REQUIED FOR LISTED COMPANY. FOR
OTHER COMPANIES INCLUDING LISTED COMPANY IT SHOULD BE FILED WITH ROC IN FORM SH-9.

5. THE PHYSICAL SHARE CERTIFICATES SHOULD BE DESTROY WITHIN 7 DAYS FROM THE DATE OF
COMPLETION OF BUY-BACK.

6. NEW ALLOTMENT OF SHARES AND FURTHER ALLOTMENT OF SAME KIND OF SHARES ARE NOT
ALLOWED WITHIN 6 MONTHS FROM COMPLETION OF BUY-BACK EXCEPT :-

*BONUS SHARES.

*CONVERSION OF WARRANTS.

*STOCK OPTION SCHEMES.

*SWAT EQUITY SHARES.

*CONVERSION OF PREFERENCE SHARES INTO EQUITY SHARES.

*CONVERSION OF DEBENTURES INTO EQUITY SHARES.

7. FOR THE PURPOSE OF SECTIONS RELATED WITH BUY-BACK, THE TERM “FREE RESERVES”
INCLUDES “SECURITIES PREMIUM ACCOUNT”.

8. REGISTER OF BUY-BACK IS MANITAINED IN FORM NO. SH-10.

9. THERE MUST BE GAP/INTERVAL OF 1 YEAR BETWEEN TWO BUY-BACK OF SHARES.

10. IF BUY-BACK IS THROUGH BOARD RESOLUTION THEN IT MUST BE PASSED IN THE BOARD
MEETING & NOT THROUGH THE CIRCULAR RESOLUTION.