Companies Act, 1956

Section - 77 - Restrictions on purchase by company, or loans by company for purchase, of its own or its holding company’s shares

Restrictions on purchase by company, or loans by company for purchase, of its own or its holding company’s shares.

77.     (1) No company limited by shares, and no company limited by guarantee and having a share capital, shall have power to buy its own shares, unless the consequent reduction of capital is effected and sanctioned in pursuance of sections to or of section .

(2) No public company, and no private company which is a subsidiary of a public company, shall give, whether directly or indirectly, and whether   by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company or in its holding company:

Provided that nothing in this sub-section shall be taken to prohibit—

         (a)  the lending of money by a banking company in the ordi­nary course of its business; or

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