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What are the provisions of buy back of shares as per Companies Act, 1956?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 kiran asked almost 3 years ago

Hi I am preparing for CA exam. May I know, What are the provisions of buy back of shares as per Companies Act, 1956?

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered over 2 years ago

Free reserves :- in this company purchase its own shares out of the left out, then by doing this sum equal to nominal value of share which has been purchased gets transferred to the capital redemption reserve. Security premium account :- in this company can't buy back its own shares or other security related issues.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered over 2 years ago

1) Free reserves :- in this company purchase its own shares out of the left out, then by doing this sum equal to nominal value of share which has been purchased gets transferred to the capital redemption reserve. 2) Security premium account :- in this company can't buy back its own shares or other security related issues.

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Picsjoin 2017224123730582 Archana answered almost 3 years ago

Hie Kiran, The provision of buy back of shares as per Companies Act, 1956 the shares must be bought by the company due to following reasons they are as follows:- 1) Promoters hold increment and increment in earning per share 2) Support of share value and to pay surplus cash won't be required by the business The resources which have to be used in buy back can be purchased from:- 1) Free reserves :- in this company purchase its own shares out of the left out, then by doing this sum equal to nominal value of share which has been purchased gets transferred to the capital redemption reserve. 2) Security premium account :- in this company can't buy back its own shares or other security related issues. The buy back period by which it has to be finished is within 12 months from the date of passing the case. In this also the company is not liable to directly or indirectly purchase its own shares or other securities issue.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered almost 3 years ago

The provision of buy back of shares as per Companies Act, 1956 the shares must be bought by the company due to following reasons they are as follows: ======================================================================== 1) Promoters hold increment and increment in earning per share 2) Support of share value and to pay surplus cash won't be required by the business The resources which have to be used in buy back can be purchased from: ====================================================================== 1) Free reserves :- in this company purchase its own shares out of the left out, then by doing this sum equal to nominal value of share which has been purchased gets transferred to the capital redemption reserve. 2) Security premium account :- in this company can't buy back its own shares or other security related issues. The buy back period by which it has to be finished is within 12 months from the date of passing the case. In this also the company is not liable to directly or indirectly purchase its own shares or other securities issue.

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