Buy back of shares by private company

1007 views 2 replies

 

Hi all..

Sec 77A states that:

Power of company to purchase its own securities.—(1) Notwithstanding anything contained in this Act, but subject to the provisions of sub-section (2) of this section and section 77B, a company may purchase its own shares or other specified securities (hereinafter referred to as “buy-back”) out of—

 (i) its free reserves; or

 (ii) the securities premium account; or

 (iii) the proceeds of any shares or other specified securities:

 Provided that no buy-back of any kind of shares or other specified securities shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities.

 

Does this mean that when we buy back shares then all the application money, share premium received from issue of equity shares since the incorporation of the Company, cannot be used for buy back of shares? Even the money received from the subscriber to the memorandum cannot be used?

Is this applicable for private company also?? Please reply... it is urgent

Replies (2)
No dear its not so....above provision states that for buy back company cannot proceed for new shares as it would defeat above provisions....no restriction on securities premium and amount of earler issue.

But then it is mentioned that buy back cannot be done out of the proceeds of an earlier issue of same kind. and no time period has been mentioned.

 

Also, is there any restriction on the rate at which buy back can be done?

No. of shares can't exceed 25% of equity share capital in one financial year.

wat about the amount?

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