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Buy back of shares of a private limited company

Companies Act 2013 322 views 1 replies

Dipjyoti Majumdar

CA in service & CS. dipmaj@

3505 Points Posted on 03 August 2016

Friends and Seniors

I have some queries on buy back of shares of a private limited company.

Section 68 of Companies Act 2013 and rule 17 of Companies (Share Capital and debenture ) rules 2014 deals with buy back provisions.

query 1) If the buy back is being implemented as per board resolution only under section 68(2)(b)(i) and (ii) as the limit is 10% of paid up capital and free reserves and there is no requirement of special resolution how the requirements as to disclosure on points like objectives of buy back, basis of arriving at the buy back price, sources of funds from which buy back would be financed, audit report to the board of directors relating to buy back be complied with.

Or this is not required ?

Regards,

Dipjyoti

Replies (1)

P C Agrawal

Registered independent director Past Ch

8229 Points Posted on 03 August 2016

Rule 17 says "Unless stated otherwise, the following norms shall be complied with .....". Further, Rule 17(1) says "The explanatory statement to be annexed to the notice of genneralmeeting pursuant to section 102 shall contain.....". In case of private company Sec.102 is not applicable unless articles provide otherwise. Naturally this provision will be applicable only in case members approval is taken. In case of only Board approval this will not apply.