Question related with buy back
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 June 2013
is it possible for section 25 company to buy back its share and if possible then what is the procedure?
21 June 2013
Hi
Check the Articles of Association of the Company, it must contain a provision authorising the company to buy-back their own shares or other specified securities. If the Articles do not contain a provision authorising buy-back, alter the articles of association by passing a special resolution in the general meeting.
Check the Articles of Association of the Company, it must contain a provision authorising the company to buy-back their own shares or other specified securities. If the Articles do not contain a provision authorising buy-back, alter the articles of association by passing a special resolution in the general meeting.
21 June 2013
Procedure for Buy-back of Shares through Tender offer from existing shareholders of the Company without the approval of shareholders of the Company:
1.
Check the Articles of Association of the Company, it must contain a provision authorising the company to buy-back their own shares or other specified securities. If the Articles do not contain a provision authorising buy-back, alter the articles of association by passing a special resolution in the general meeting. [Procedure for alteration in the Articles of Association]
2.
Convene and hold a Board Meeting after giving notice to all the directors [Section 286] to discuss besides others the following matters.
· To pass a [resolution] for buy-back of shares upto 10% of the total paid up capital and free reserve of the Company and also decide the price at which the company offers to the shareholders. (Section 77A)
· To appoint a Compliance officer for ensuring compliance of the provisions of the Act, the Regulations, listing Agreement and any other applicable laws relating to Buy-back of securities and to redress the grievances of the investors.
· To Appoint Merchant Banker who will take care of the whole proceeding.
· To decide the location about the investor service centre, it is desirable that such centres are opened in all such cities where the security holders holding 10% or more of the voting rights reside.
· To decide the specified date and mention the same in the public announcement for the purpose of dispatch of letter of offer to the security holders. It should not be earlier than 30 days and not later than 42 days from the date of the public announcement.
3.
Inform the Stock Exchange with which shares of the company are listed about the date of this meeting prior to the board meeting. [Clause 19 of the Standard Listing Agreement]
4.
Inform the said Stock Exchange within 15 minutes of the board Meeting, of the outcome of the meeting by letter or fax.
5.
Make a Public Notice with in 2 days of passing the Board Resolution but before making the Public Announcement for buy-back at least one English, Hindi and Regional Language Newspaper.
Such Notice shall contain the particulars specified in Schedule I to the Regulations.
6.
After it has been authorised to buy-back, make a Public announcement at least 7 days before the commencement of buy-back at least one English, Hindi and Regional language Newspaper. Such public announcement shall contain the particulars specified in Schedule II to the Regulations.
7.
A drat letter of offer, along with fees prescribed in Schedule IV to the Regulations, shall be filed with the SEBI through a merchant banker, with in 7 days of the Public Announcement and at least 21 days before dispatch of the letter of offer to the securityholders. The draft letter of offer shall include the particulars specified in Schedule III to the Regulations.
8.
A declaration of solvency in Form no 4A shall be filed with SEBI along with the draft letter of offer. It is also to be filed with Registrar of Companies simultaneously.
9.
Dispatch a letter of offer to the securityholders only after 21 days from submission of the draft letter of offer to SEBI and it should be reached at the securityholders before the issue open.
10.
Decide the date of opening of the offer, it should not be earlier than 7 days and not later than 30 days from the specified date. The offer should be opened for a period not less than 15 days and not more than 30 days from the date of despatch of letter of offer to the securityholders.
11.
Open a Escrow account with a Scheduled Commercial Bank on or before the opening of the offer and deposit therein a specified amount as and by way of security. It is 25% of the consideration payable in case the consideration does not exceed Rs. 100 crores and in case the consideration is more than Rs. 100 crores, it is 25% of Rs. 100 crores and 10% of the balance of the consideration payable.
12.
In case the shares tendered in dematerialized mode, the company require opening a Special Depository Account through the Registrar to the Offer.
13.
Open a Special Bank Account with the Banker to the Issue. This account should be opened immediately after the date of closure of the offer and deposit the whole consideration including lying in the escrow account.
14.
The verification should be completed with in 15 days from the date of closure.
15.
The payment should be made with in 7 days from the date of completion of verification of offer.
16.
Extinguish and destroy the security certificate so bought back in the presence of Registrar to the issue\ merchant banker and the Statutory Auditors of the Company within 7 days from the date of verification of securities.
17.
Furnish a certificate to SEBI and the Stock Exchange(s) with in 7 days of extinguishments and destruction of the certificates. Such certificate shall be duly verified by the Registrar to the issue/ Merchant Banker and Statutory Auditors of the Company and two whole-time directors of the Company including the Managing Director.
18.
Issue a Public advertisement in the National daily with in 2 days of completion of buy-back.
19.
Prepare a Register of Securities Bought Back in Form no 4B.
20.
File a return in Form no 4C with the concerned Registrar of Companies and SEBI within 30 days of completion of Buy-back.
Procedure for Buy-back of Shares through Tender offer from existing shareholders of the Company without the approval of shareholders of the Company:
1.
Check the Articles of Association of the Company, it must contain a provision authorising the company to buy-back their own shares or other specified securities. If the Articles do not contain a provision authorising buy-back, alter the articles of association by passing a special resolution in the general meeting. [Procedure for alteration in the Articles of Association]
2.
Convene and hold a Board Meeting after giving notice to all the directors [Section 286] to discuss besides others the following matters.
· To pass a [resolution] for buy-back of shares upto 10% of the total paid up capital and free reserve of the Company and also decide the price at which the company offers to the shareholders. (Section 77A)
· To appoint a Compliance officer for ensuring compliance of the provisions of the Act, the Regulations, listing Agreement and any other applicable laws relating to Buy-back of securities and to redress the grievances of the investors.
· To Appoint Merchant Banker who will take care of the whole proceeding.
· To decide the location about the investor service centre, it is desirable that such centres are opened in all such cities where the security holders holding 10% or more of the voting rights reside.
· To decide the specified date and mention the same in the public announcement for the purpose of dispatch of letter of offer to the security holders. It should not be earlier than 30 days and not later than 42 days from the date of the public announcement.
3.
Inform the Stock Exchange with which shares of the company are listed about the date of this meeting prior to the board meeting. [Clause 19 of the Standard Listing Agreement]
4.
Inform the said Stock Exchange within 15 minutes of the board Meeting, of the outcome of the meeting by letter or fax.
5.
Make a Public Notice with in 2 days of passing the Board Resolution but before making the Public Announcement for buy-back at least one English, Hindi and Regional Language Newspaper.
Such Notice shall contain the particulars specified in Schedule I to the Regulations.
6.
After it has been authorised to buy-back, make a Public announcement at least 7 days before the commencement of buy-back at least one English, Hindi and Regional language Newspaper. Such public announcement shall contain the particulars specified in Schedule II to the Regulations.
7.
A drat letter of offer, along with fees prescribed in Schedule IV to the Regulations, shall be filed with the SEBI through a merchant banker, with in 7 days of the Public Announcement and at least 21 days before dispatch of the letter of offer to the securityholders. The draft letter of offer shall include the particulars specified in Schedule III to the Regulations.
8.
A declaration of solvency in Form no 4A shall be filed with SEBI along with the draft letter of offer. It is also to be filed with Registrar of Companies simultaneously.
9.
Dispatch a letter of offer to the securityholders only after 21 days from submission of the draft letter of offer to SEBI and it should be reached at the securityholders before the issue open.
10.
Decide the date of opening of the offer, it should not be earlier than 7 days and not later than 30 days from the specified date. The offer should be opened for a period not less than 15 days and not more than 30 days from the date of despatch of letter of offer to the securityholders.
11.
Open a Escrow account with a Scheduled Commercial Bank on or before the opening of the offer and deposit therein a specified amount as and by way of security. It is 25% of the consideration payable in case the consideration does not exceed Rs. 100 crores and in case the consideration is more than Rs. 100 crores, it is 25% of Rs. 100 crores and 10% of the balance of the consideration payable.
12.
In case the shares tendered in dematerialized mode, the company require opening a Special Depository Account through the Registrar to the Offer.
13.
Open a Special Bank Account with the Banker to the Issue. This account should be opened immediately after the date of closure of the offer and deposit the whole consideration including lying in the escrow account.
14.
The verification should be completed with in 15 days from the date of closure.
15.
The payment should be made with in 7 days from the date of completion of verification of offer.
16.
Extinguish and destroy the security certificate so bought back in the presence of Registrar to the issue\ merchant banker and the Statutory Auditors of the Company within 7 days from the date of verification of securities.
17.
Furnish a certificate to SEBI and the Stock Exchange(s) with in 7 days of extinguishments and destruction of the certificates. Such certificate shall be duly verified by the Registrar to the issue/ Merchant Banker and Statutory Auditors of the Company and two whole-time directors of the Company including the Managing Director.
18.
Issue a Public advertisement in the National daily with in 2 days of completion of buy-back.
19.
Prepare a Register of Securities Bought Back in Form no 4B.
20.
File a return in Form no 4C with the concerned Registrar of Companies and SEBI within 30 days of completion of Buy-back.
Querist : Anonymous
Querist :
Anonymous
(Querist)
24 June 2013
Thanks Ajay
24 June 2013
My Pleasure.......
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