Buy back of equity shares
This query is : Resolved
12 January 2015
What is the complete procedure of Buy back of equity shares by an unlisted public company of less than 10% of PUSC and Free Reserves
12 January 2015
you may refer the link below
https://rna-cs.com/buy-back-of-securities-of-unlisted-public-company-under-companies-act-2013
https://rna-cs.com/buy-back-of-securities-of-unlisted-public-company-under-companies-act-2013
12 January 2015
Sir,
In the link provided above, the procedure of buy back of shares through EGM i.e. through special resolution is given.
But I want to know the procedure to buy back less than 10% of PUSC & FR i.e. through Board Resolution.
Kindly help me to know the same.
In the link provided above, the procedure of buy back of shares through EGM i.e. through special resolution is given.
But I want to know the procedure to buy back less than 10% of PUSC & FR i.e. through Board Resolution.
Kindly help me to know the same.
18 July 2024
Certainly! Here is a simplified procedure for an unlisted public company to buy back its equity shares under the provisions where the buyback size is less than 10% of the Paid-Up Share Capital (PUSC) and Free Reserves (FR), specifically through a Board Resolution:
### Procedure for Buyback of Shares by an Unlisted Public Company (Less than 10% of PUSC and FR)
1. **Board Resolution**: The process starts with the Board of Directors approving the proposal for buyback of shares. The Board resolution should include the following details:
- Authorization to conduct the buyback of shares.
- Maximum number of shares to be bought back, which should be less than 10% of PUSC and FR combined.
- Maximum buyback price per share.
- Appointment of a merchant banker who will oversee the buyback process.
- Appointment of a registrar and transfer agent, if required.
2. **Special Resolution**: While a special resolution is typically required for buybacks exceeding 10% of PUSC and FR, in your case, since the buyback is less than 10%, a special resolution may not be necessary depending on the company's Articles of Association. Check the company's AoA to confirm if a special resolution is required.
3. **Draft Letter of Offer**: Prepare a draft Letter of Offer containing details such as:
- Name and address of the company.
- Date and time of the Board meeting approving the buyback.
- Number of shares to be bought back.
- Buyback price per share.
- Mode of payment to shareholders.
- Period within which the shareholders must accept the offer.
- Details of the escrow account for depositing funds.
4. **Merchant Banker's Report**: Obtain a report from the merchant banker confirming that the company complies with the provisions of the Companies Act, 2013, and the Buyback Regulations. This report must be submitted to the Board of Directors for their consideration.
5. **File Letter of Offer with Registrar**: After the Board approval, file the final Letter of Offer along with the necessary attachments with the Registrar of Companies (ROC) at least 30 days before the date of opening of the buyback.
6. **Publish Advertisement**: Advertise the buyback offer in newspapers (one in English and one in the regional language) at least 21 days before the opening of the offer.
7. **Open Offer Period**: The offer period should not be less than 15 days and not more than 30 days from the date of publication of the advertisement.
8. **Payment to Shareholders**: Once the shareholders accept the offer, make the payment within 7 days of the closure of the offer period.
9. **File Post-Buyback Report**: After completing the buyback, file a post-buyback report with the ROC within 30 days from the date of completion of the buyback.
### Important Points to Consider:
- Ensure compliance with the provisions of the Companies Act, 2013, and the Buyback Regulations.
- Maintain transparency throughout the process and communicate effectively with shareholders.
- Seek necessary approvals and permissions as per the company's Articles of Association and applicable laws.
By following these steps and ensuring compliance with legal requirements, an unlisted public company can successfully conduct a buyback of its shares through a Board Resolution when the size of buyback is less than 10% of PUSC and FR.
### Procedure for Buyback of Shares by an Unlisted Public Company (Less than 10% of PUSC and FR)
1. **Board Resolution**: The process starts with the Board of Directors approving the proposal for buyback of shares. The Board resolution should include the following details:
- Authorization to conduct the buyback of shares.
- Maximum number of shares to be bought back, which should be less than 10% of PUSC and FR combined.
- Maximum buyback price per share.
- Appointment of a merchant banker who will oversee the buyback process.
- Appointment of a registrar and transfer agent, if required.
2. **Special Resolution**: While a special resolution is typically required for buybacks exceeding 10% of PUSC and FR, in your case, since the buyback is less than 10%, a special resolution may not be necessary depending on the company's Articles of Association. Check the company's AoA to confirm if a special resolution is required.
3. **Draft Letter of Offer**: Prepare a draft Letter of Offer containing details such as:
- Name and address of the company.
- Date and time of the Board meeting approving the buyback.
- Number of shares to be bought back.
- Buyback price per share.
- Mode of payment to shareholders.
- Period within which the shareholders must accept the offer.
- Details of the escrow account for depositing funds.
4. **Merchant Banker's Report**: Obtain a report from the merchant banker confirming that the company complies with the provisions of the Companies Act, 2013, and the Buyback Regulations. This report must be submitted to the Board of Directors for their consideration.
5. **File Letter of Offer with Registrar**: After the Board approval, file the final Letter of Offer along with the necessary attachments with the Registrar of Companies (ROC) at least 30 days before the date of opening of the buyback.
6. **Publish Advertisement**: Advertise the buyback offer in newspapers (one in English and one in the regional language) at least 21 days before the opening of the offer.
7. **Open Offer Period**: The offer period should not be less than 15 days and not more than 30 days from the date of publication of the advertisement.
8. **Payment to Shareholders**: Once the shareholders accept the offer, make the payment within 7 days of the closure of the offer period.
9. **File Post-Buyback Report**: After completing the buyback, file a post-buyback report with the ROC within 30 days from the date of completion of the buyback.
### Important Points to Consider:
- Ensure compliance with the provisions of the Companies Act, 2013, and the Buyback Regulations.
- Maintain transparency throughout the process and communicate effectively with shareholders.
- Seek necessary approvals and permissions as per the company's Articles of Association and applicable laws.
By following these steps and ensuring compliance with legal requirements, an unlisted public company can successfully conduct a buyback of its shares through a Board Resolution when the size of buyback is less than 10% of PUSC and FR.
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