banner_ad

Buy back of shares - max. no. of shares that can be buyback

21529 views 19 replies
Quick Summary
Discussion explains max buyback under Companies Act 2013 using three tests. Key issue is debt equity ratio. Correct approach considers CRR impact via equations. Final buyback amount is 112.5 crore allowing 3.75 crore shares at 30 each.

This is the case of buy back of equity shares not the issue of new equity shares that is my question above.  I am getting confused please explain me ... 

For buy back of shares as per sec 55 of the companies act 2013 company can go for following 3 alternative options.
1. out of free reserves.
2. out of fresh issue
3. both of the above.
ok.
if company has huge amount of free reserves then company will choose option 1 only. i.e. buy back exclusively out of free reserves only.
but company requires some amount of liquid for payment to share holders on buy back.
in the case of shortage of liquid cash - company will go for the following options.
1. sale of assets
2. loans from banks
3. issue of debentures/ bonds
4. issue of shares.
when company has selected last option, then how many shares to be issued for fulfilling the liquid fund requirements. so
number is shares to be issued is based on issue price not on face value.
Thank you so much now it's clear...

coz co act 2013 is finished

 

Condition of Buy-back: As per Section 68 of the Companies Act, 2013 the conditions for Buy-back of shares are: Authorization for Buy-Back: Articles of Association(AOA) of the company should authorize Buy-Back, if no provision in AOA then first alter the AOA. Approval:: Approval of Board of Directors- up to10% of the total paid-up equity capital and free reserves of the company; or Approval of Shareholders- up to25% of the aggregate of paid-up capital and free reserves of the company. Post buy-back debt-equity ratio cannot exceed 2:1. Only fully paid up shares can be brought back in a financial year. Etc..

 


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 13 April 2026
GST CONSULTANCY

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 28 March 2026
CA Final

Ashok Amol & Associates

New Delhi

CA Final

View Details
Company
Featured 29 April 2026
Manager- Finance and Compliance

Naveen Fintech Pvt Ltd

Kolkata

CA Inter

View Details
Company
Featured 14 April 2026
GST CONSULTANT

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 02 May 2026
Senior Executive

hitesh chandwani & co

Pune

B.Com

View Details
Company
Featured 28 March 2026
Accountant

Ashok Amol & Associates

New Delhi

B.Com

View Details