2. CONTACTS NO. 1.No. 4. CHAUDHARI SANDIP DARJI SARVESH PATHAK WRO NO.GROUP MEMBERs Presented By Sr. 0330948 0304668 0304667 0391090 0246624 9664321610 9870483171 9664314794 8097331040 9773141977 .No Name SANU D GUPTA JAYNENDRA R. 5. MISHRA SURESH J. Sr. 3.

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V. . Procedure for Buy . Condition for Buy . Bibliography.Sources of Funds for Buy . IV.CONTAINTS I.Back.Back of shares. II.Back of shares.Back.Back of shares. Procedures before of Buy . i. VI. Introduction. Procedure After of Buy .Sources III. ii. III. Conclusion.

1999 . By shares . & if shares are listed in any Stock Exchange than SEBI Regulation.77 of the companies Act . But after making amendment on 1999 in The Companies Act 1956.77A of companies Act. When company purchase their own shares from existing shareholders are called as ³BUY ± BACK OF SHARES´. 2. Section 80 or by corresponding provision of the early Act.1999 provides that The Company ltd. with Section 77A of The Companies Act.Buy ± back of shares INTRODUCTION: I. 1998 are applicable. Section 77. by shares can buy their own shares or other securities but subject to certain conditions & regulations. Before 1999. . & so Guarantee company having a share capital shall buy it¶s own shares. V. except as provided by. Section 100 ± 104( By way of reduction of capital ). which provides that no company Ltd. 3. The Buy back of shares are complied with Sec. This is laid down under Sec. called as Companies (Amendment) Act. and 4. IV. II. 1. III. Section 402( By way of preventing oppression ). the Fundamental principle of companies were not allowed the companies to purchases their on shares .

Association. The expression debt include buyall amounts of Unsecured & Secured debts.Conditions for buy-back of shares buyThe company can not purchase their own Shares Or Securities until following condition are fulfilled which is given as below. V. Provided that the buy. The ratio of Debt owed by the company should not exceed the double of the capital & reserves after such buy-back. II. .up equity capital and free reserve in that paidfinancial year. III.back their shares more than 25%of the Total buyPaidPaid-up capital and free reserves of the company. It must permitted by it¶s Articles of Association.back of equity shares in financial year shall not buyexceed 25% of the total paid. I. The company can not buy. The necessary special resolution of authorising the buy-back has been buypassed in the General Meeting of The Company.

The Shares or Other Securities which are going for buy back should be fully paid up.The buy-back in respect of shares or other specified securities other than those specified in Clause(f) is in accordance with guidelines as may be prescribed [Sec. 372A. Balance of Security Premium. Explanation to Sec. . VI.The term ³Free Reserves´ have the same meaning which is given under clause(b). The buy-back of the shares or other specified securities listed in the any buyrecognised stock exchange is in accordance with the regulations made by SEBI in this behalf.The buyVIII. VIII. which means those reserves which are free for distribution as Dividend and it also include the CR. VII.77A(2) & 77A(6)].

The securities premium account. than a su the no inal equal to Value of the share so purchased shall be transferred to the apital eduction eserve ccount referred to in clause(d) of the proviso to sub ± sec. or c.(1) of Sec.80 and details of such transfer shall be disclosed in the Balance Sheet. buy-back of any kind of shares or other specified securities cannot be made out of the proceeds an earlier issue of the same kind of shares. It¶s free reserve. or b. SECTION 77A. However. The proceeds of any shares or other specified securities. TRANSFER OF CERTAIN SUM TO CAPITAL REDUCTION ACCOUNT SEC.77A: Where co p ny purchases its own share out of reserves. d.[Sec. .Sources of funds for buy-back of shares buyThe purchases should be out of : a.77A(1)].

The class of security intended to be purchased under the buy ± back.Procedures FOR Buy-Back BuyFor Buy ± Back of shares The Company has to follow the two main Procedures . BuyB. . The notice of the Meeting on which the Special resolution is proposed has to Passed shall be accompanied by an explanatory statement statingstatinga. b. d. The necessity for the buy ± back. c. Procedures Before Buy. A. Procedures Before Buy. given as below: A. Procedures After Buy Back. A full and complete of the material facts.back.back. Buyi. and The time limit for completion of buy ± back. e. The amount to be invested under the buy ± back.

subbuyIf the companies shares are not listed in any Recognised Stock Exchange Market than there is no need for filing declaration of solvency with SEBI. A draft letter of offer containing particulars specified in Schedule II of the rules has to be filed with the Registrar (ROC) The declaration of solvency has to be filed in the Form No. iv. Offer Procedure: i. Offer is opened for 15 to 30 days from date of dispatch of letter of offer. Offer lodged deemed to be accepted unless rejection is communicated within 21 days of date of closure. ii. ii. Letter of Offer: i. The Co. Acceptance to be on proportionate basis if shares offered by members are more than the total no. Declaration Of Solvency.(2). iii.ii.4A with ROC along with the Letter of Offer. iv. Where a company has passed a special resolution under clause(b) of subsub-sec. ii. should complete their buy-back within Twelve Months from the date buyof passing a special resolution or resolution passed by the Board Under Clause(b) of sub-Sec.(2) to buy-back under this Sec. Time Limit. of shares to be bought back. Letter of offer has to be dispatched with in 21 days from the date of its filing with ROC.(2) or the board has passed a resolution under the fist proviso to clause(b) of sub-sec. sub- . iii. i. v.

it shall maintain a register of the securities so bought. I.back. after completion of the buy ± back under this section. the consideration paid for the securities bought back. . the date of existing and physically destroying of securities and such other particulars as may be prescribed in this register. The Co.. has to furnish to the ROC a certificate duly verified by 2 directors including MD & the whole time secretary regarding compliance with abovementioned rule.A to the ules within 30 days of completion. the date of cancellation of securities. III. file with the Registrar and SEBI. Extinguishment of Share certificate: i. A Co. The share certificate bought back have to be physically destroyed in the presence of the Company Secretary in whole time practice within 7days from the date of completion.B to the rules . Register of Buy ± Back: The company has to maintain register on shares bought back in a form of Specified in Annex. Procedures After Buy. ii. The return has to be filed in Form Specified in Annex. Filing of Buy Back Return: i. ii. II.B. There are certain procedures which have to followed by the company After buy-back . Buys Back its Shares(securities) under this sec. a return contain such completion. Shall.So Co.

or any officer of the co. Cooling Period: i. or with fine which may extend to Rs. . ii. has to open a special a account and deposit the entire amount to be paid as consideration for the Buy ± Back. who is in default shall be punishable with imprisonment for a term which may extend to 2 years. V. ii.(1) of Sec. Immediately after conclusion of the date offered.50000 or both. If Co. VI. Payment Procedure: i.(2). Where a Co.. completes a buyback of its shares under this Sec. including allotment of further shares under clause (a) of Sub Sec. it shall not make a further issue of share. The Co. the Co. makes default in complying with the provisions of this section or any rules made there under or any regulation mad under clause (f) of Sub sec.81 Or Other Specified Securities within period of 6 months except by way of bonus issue or in the discharge of subsisting obligation such as of conversion warrants or preference share or debenture or sweat shares. Penalty for default: i.IV.

in repayable of deposit or interest payable thereon. has not complied with the provision of Sec. and 211. II. or Through any investment Co. or group of investment Companies. No Co. . redemption of debentures or pref. shall directly or indirectly purchases its own shares other specified in case such Co..207.Prohibition of Buy ± Back in certain circumstances: (Section 77B): I. No Company shall directly or indirectly purchases its own share or other specified securitiessecuritiesThrough any subsidiary company including its own subsidiary companies. i. 159. share or payment of dividend to any shareholder or other external liability or any interest payable thereon to any financial institution or Bank is Subsisting. iii. ii. If default. by the Co.

Once the buy back completed. It is usually employed when the stock value of the company is highly diluted or if the company has high amounts of free reserves or if the promoters of the company want to acquire a greater controlling percentage within the company. the shares that have been bought back do not rest with the company but are extinguished . .Conclusion Buy back is mechanism through which the company pays of its investor and buys off its own shares.

Bibliography .

Room No10. Tamoli Patra Chawl No.J.No. 2. WRO WRO WRO WRO 0246624 9664321610 9870483171 9664314794 9773141977 Group Leader: Sanu D Gupta (WRO ) Contacts No. SIWRI(W) Mumbai-15. . 01. Sr. CONTACTS NO. CHAUDHARI SARVESH PATHAK WRO NO.GROUP MEMBER¶S Sr. 1.No Name SANU D GUPTA JAYNENDRA R. 4. MISHRA SURESH J. 3. Swan Mill.Road. T. : 9664321610 Address : Opp.

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i.CONTAINTS I. Introduction.Back of shares. Procedures before of Buy .Back of shares. Procedure for Buy . ii. VI. Conclusion. III.Back of shares. Condition for Buy .Sources III.Sources of Funds for Buy . IV. V.Back.Back. II. Bibliography. Procedure After of Buy . .

II. IV. Section 77. Section 100 ± 104( By way of reduction of capital ).1999 provides that The Company ltd. Section 80 or by corresponding provision of the early Act.INTRODUCTION: I. This is laid down under Sec. When company purchase their own shares from existing shareholders are called as ³BUY ± BACK OF SHARES´.77A of companies Act. and 4. 1. Section 402( By way of preventing oppression ). except as provided by. But after making amendment on 1999 in The Companies Act 1956. V. By shares . Before 1999. which provides that no company Ltd. 2. by shares can buy their own shares or other securities but subject to certain conditions & regulations. 1998 are applicable.1999 .77 of the companies Act . called as Companies (Amendment) Act. with Section 77A of The Companies Act. . III. 3. & if shares are listed in any Stock Exchange than SEBI Regulation. The Buy back of shares are complied with Sec. & so Guarantee company having a share capital shall buy it¶s own shares. the Fundamental principle of companies were not allowed the companies to purchases their on shares .

If the company¶s shares are listed in the recognised Stock Exchange. The ratio of Debt owed by the company should not exceed the double of the capital & reserves after such buy-back.Requirement for buy-back of shares buyThe company can not purchase their own Shares Or Securities until following condition are fulfilled which is given as below.up equity capital and free reserve in that paidfinancial year.back their shares more than 25%of the Total buyPaidPaid-up capital and free reserves of the company. III. The necessary special resolution of authorising the buy-back has been buypassed in the General Meeting of The Company. . The declaration of solvency must be filed with The ROC & SEBI . Association. Provided that the buy. II.back of equity shares in financial year shall not buyexceed 25% of the total paid. The company can not buy. contd. The expression debt include buyall amounts of Unsecured & Secured debts. I. It must permitted by it¶s Articles of Association. IV. V.

The buy-back of the shares or other specified securities listed in the any buyrecognised stock exchange is in accordance with the regulations made by SEBI in this behalf.77A(2) & 77A(6)]. Explanation to Sec. 372A. VII. VI.The buy-back in respect of shares or other specified securities other than those specified in Clause(f) is in accordance with guidelines as may be prescribed [Sec. . Balance of Security Premium. VIII.The term ³Free Reserves´ have the same meaning which is given under clause(b). which means those reserves which are free for distribution as Dividend and it also include the CR. The Shares or Other Securities which are going for buy back should be fully paid up.The buyVIII.

(2) or the board has passed a resolution under the fist proviso to clause(b) of sub-sec.(2) to buy-back under this Sec.one of whom shall be MD if any. Time Limit.back A. If the companies shares are not listed in any Recognised Stock Exchange Market than there is no need for filing declaration of solvency with SEBI. B. as result of which they formed an opinion that it is capable of meeting its liabilities & will¶nt be rendered insolvent within period of 1yr of the date of declaration adopted by the Board. sub- II. . AN also verified by an affidavit to the effect that the Board has made a full inquiry into the affairs of the Co. IV.. should complete their buy-back within Twelve Months from the date of buypassing a special resolution or resolution passed by the Board Under Clause(b) of sub-Sec. I.Rules for buy .(2). subbuyBefore making such Buy-back. the company have to file the declaration of Buysolvency with The Registrar and SEBI in the form as may be prescribed. & signed by at least two directors of the Co. Declaration Of Solvency Where a company has passed a special resolution under clause(b) of subsubsec. III. The Co.

or b. .[Sec.Sources of funds for buy-back of shares buyThe purchases should be out of : a. The securities premium account. d. than a su the no inal equal to Value of the share so purchased shall be transferred to the apital eduction eserve ccount referred to in clause(d) of the proviso to sub ± sec. or c. The proceeds of any shares or other specified securities.77A: Where a co pany purchases its own share out of reserves. TRANSFER OF CERTAIN SUM TO CAPITAL REDUCTION ACCOUNT SEC. buy-back of any kind of shares or other specified securities cannot be made out of the proceeds an earlier issue of the same kind of shares.77A(1)]. It¶s free reserve.80 and details of such transfer shall be disclosed in the Balance Sheet. SECTION 77A.(1) of Sec. However.

b. BuyThe notice of the Meeting on which the Special resolution is proposed has to Passed shall be accompanied by an explanatory statement statingstatinga. and The time limit for completion of buy ± back. The class of security intended to be purchased under the buy ± back.back. A. Procedures Before Buy. e.back. . given as below: A. Procedures After Buy Back. contd.Procedures FOR Buy-Back BuyFor Buy ± Back of shares The Company has to follow the two main Procedures . c. The amount to be invested under the buy ± back. The necessity for the buy ± back. A full and complete of the material facts. d. BuyB. Procedures Before Buy.

Extinguishment of Share certificate: i.So Co. the consideration paid for the securities bought back.back. it shall maintain a register of the securities so bought. Shall. Procedures Before Buy. II. There are certain procedures which have to followed by the company After buy-back . has to furnish to the ROC a certificate duly verified by 2 directors including MD & the whole time secretary regarding compliance with abovementioned rule. The share certificate bought back have to be physically destroyed in the presence of the Company Secretary in whole time practice within 7days from the date of completion. .A to the ules within 30 days of completion. Filing of Buy Back Return: i. Register of Buy ± Back: The company has to maintain on shares bought back in a form of Specified in Annex. ii. a return contain such completion. after completion of the buy ± back under this section. A Co. contd. the date of existing and physically destroying of securities and such other particulars as may be prescribed in this register. file with the Registrar and SEBI. I.A to the rules .B. the date of cancellation of securities. III.. ii. The Co. The return has to be filed in Form Specified in Annex. Buys Back its Shares(securities) under this sec.

including allotment of further shares under clause (a) of Sub Sec. has to open a special a account and deposit the entire amount to be paid as consideration for the Buy ± Back. completes a buyback of its shares under this Sec.IV. Where a Co. or any officer of the co. Immediately after conclusion of the date offered. VI. The Co. makes default in complying with the provisions of this section or any rules made there under or any regulation mad under clause (f) of Sub sec.81 Or Other Specified Securities within period of 6 months except by way of bonus issue or in the discharge of subsisting obligation such as of conversion warrants or preference share or debenture or sweat shares.(1) of Sec. who is in default shall be punishable with imprisonment for a term which may extend to 2 years. the Co.. Payment Procedure: i.(2). or with fine which may extend to Rs. ii. V. If Co. Penalty for default: i. ii. Cooling Period: i. .50000 or both. it shall not make a further issue of share.

Once the buy back shares. the shares that have been bought back do not rest with the company but are extinguished. completed. company. It is usually extinguished. . employed when the stock value of the company is highly diluted or if the company has high amounts of free reserves or if the promoters of the company want to acquire a greater controlling percentage within the company.Conclusion Buy back is mechanism through which the company pays of its investor and buys off its own shares.

K.S.Bibliography ‡ ‡ ‡ Corporate Law (G. Professional Fro Internet 1. rticle on Legal aspect of Buy Back of Shares by Dr. Kapoor) Co plete Buy Back anual fro C.co 2. rticle on Buy back of shares & Securities by Nerissa Madhok website : . . Srinivas website : articlesbase.

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