Hi May I know, What are the provisions of Authority and Quantum of Buy back of Securities?
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1. Authority in the Articles โ Buyback of securities should be authorized by the Articles of Association โ Section 77A (2)(A)
2. Board resolution and quantum of buy back โ By passing a resolution, the Board can authorize the buy โ back of securities not exceeding 10% of the total paid โ up equity capital and free reserves of the company. Section 77A (2)
3. Shareholdersโ resolution and quantum of buy โ back โ By passing a special resolution, the buyback of securities is or less than twenty-five per cent of the total paid-up capital and free reserves of the company. Section 77A (2)(b)& (c)
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BUY BACK OF SECURITIES
โข must be authorized by its articles;
โข a special resolution has been passed at a general meeting of the company authorizing the buy-back, but the same is not required when:
i. The buy-back is 10% or less of the total paid-up equity capital and free reserves of the company; and
ii.such buy-back has been authorized by the Board by means of a resolution passed at its meeting;
โข The buy-back is twenty-five per cent or less of the aggregate of paid-up capital and free reserves of the company. But in case of Equity Shares, the same shall be taken as 25% of paid up equity capital only. Debt equity ratio should be 2:1. Where:
Debt is aggregate of secured and unsecured debts owed by the after buy-back Equity is aggregate of the paid-up capital and its free reserves;
โข All the shares or other specified securities for buy-back are fully paid-up;
โข If shares or securities are listed, buy back will be in accordance with the regulations made by the Securities and Exchange Board in this behalf; and
โข The buy-back in respect of unlisted shares or other specified securities is in accordance Share Capital and Debentures Rules, 2014.
โข No offer of buy-back shall be made within a period of one year from the date of the closure of the preceding offer of buy-back, if any.
Authority and Quantum of Buy back of Securities
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**1. Authority in the Articles** โ Buyback of securities should be authorized by the Articles of Association โ Section 77A (2)(A)
**2. Board resolution and quantum of buy back** โ By passing a resolution, the Board can authorize the buy โ back of securities not exceeding 10% of the total paid โ up equity capital and free reserves of the company. Section 77A (2)
**3. Shareholdersโ resolution and quantum of buy โ back** โ By passing a special resolution, the buyback of securities is or less than twenty-five per cent of the total paid-up capital and free reserves of the company. Section 77A (2)(b)& (c)
**4. Maximum Quantum of buy back** โ A company cannot buy back more than 25% of its total paid โ up capital and free reserves. Section 77A (2)(c)
**5. Further offer of buyback** - No offer of buy-back shall be made within a period of three hundred and sixty-five days reckoned from the date of the preceding offer of buy-back, if any. Second proviso to Section 77A(2)