Articles of association

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 March 2013 Hi, all, could anybody please help me out on my query?

Question: In case of a Private Limited Company intending to buy-back its shares, is there a need to alter the Articles of Association if its silent on the buy-back clause? Do we need to check the Table A to ensure that it contains the buyback provision if the Articles mentions and I quote "Subject as hereinafter otherwise provided, the regulations contained in Table A in the Schedule to the Companies Act,1956 shall to the Company so far as they are applicable to Private Company, except so far as they have been impliedly or expressly modified by what is contained in the Articles hereinafter mentioned as altered or amended from time to time.

Kindly reply at the earliest.

Regards

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
Follow

12 March 2013 Yes by virtue of provisions of section 77A of the Companies Act, AoA must contain a buy back clause. Even Table A of Schedule I will not help since it also do not contain buy back clause. You will have to alter the AoA and insert the buy back clause.

Querist : Anonymous

Querist : Anonymous (Querist)

12 March 2013
Thank You Sir for the reply. Could you please clarify the point that Table A of Schedule 1 does not contain the buyback clause? This is because I checked up in the Table A And i found a clause regarding "Purchase of Shares" and i am reproducing the exact words as following:
'PURCHASE OF OWN SHARES
35. Subject to the provisions of the Act, the company may purchase its own shares (including any redeemable shares) and, if it is a private company, make a payment in respect of the redemption or purchase of its own shares otherwise than out of distributable profits of the company or the proceeds of a fresh issue of shares.'

Will this clause suffice the requirement of buy-back clause?

Regards

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now