buyback of shares
Santosh Bangar
There are 2 members in a Private Company. Can a Company buyback its shares only from one member? if yes, then what is the mode/method ?
Sonia Yadav
From: Santosh Bangar <santoshban...@gmail.com>
To: csmysore <csmy...@googlegroups.com>
Sent: Wednesday, April 20, 2016 4:58 PM
Subject: [CSMysore] buyback of shares
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Santosh Bangar
Chandravijay Shah & Co.
If Company buys back entire shareholding of 1 Member, whether Company will be left with Minimum No. of mandatory Shareholders?
Santosh Bangar
Chandravijay Shah & Co.
Yes. It is fine.
I raised the Question, in which I had used the word “entire”, because your initial Query was silent on this issue.
Santosh Bangar
I would like to know the answer. Can anybody help me out.
Ratan Marwah
BUY – BACK OF EQUITY SHARES
Governing section of the Companies Act, 2013:
Section : 68, 69 & 70
Rules : The Companies (Share Capital & Debentures ) Rules, 2014
Provisions of Buyback
The buyback of shares can be made out of : -
a) its free reserves;
b) the securities premium account or
c) the proceeds of the issue of any shares or other specified securities:
However, No buy-back of any kind of shares or other specified securities shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities.
Manner of BuyBack of shares and securities:
a) From the existing security holders on a proportionate basis through the private offer.
b) From the open market by purchasing the securities issued to employees of the company under a scheme of stock option or sweat equity.
Terms & conditions to be complied before buy-back :
a) Authorized by AOA.
b) Shareholders’ Special resolution shall be passed in General Meeting authorizing upto 25% of total paid up capital and free reserves provided that the buyback of equity shares in any financial year shall not exceed 25% of its total paid up capital in that financial year.
c) The max quantum of buyback can be upto 10% of the total paid up equity capital & free reserves by the authority of the Board by means of resolution of the Board Meeting.
d) After the buy-back, the debt of the company namely the amount of secured and unsecured debts shall not be more than twice.
e) All the shares involved for buy back must be fully paid-up.
Filing of Declaration with ROC
As soon as the company has passed the Board/Resolution for buy-back and before making the buy-back, the company shall file with ROC in the prescribed Form SH -9 a declaration of solvency duly verified by an affidavit to the effect that the Board of directors has made a full enquiry into affairs of the company as a result of which they have formed an opinion that it is capable of meeting its liabilities and will not be rendered insolvent with in one year of the date of declaration of solvency shall be accompanied with an affidavit. The declaration must be approved by the Board and signed by atleast two directors of the company.
Procedure :
1. To hold a Board Meeting & pass a resolution for BuyBack its securities approve the following documents :
1. Scheme for buy-back as contained in Letter of offer
2. Explanatory statement containing disclosures specified in Sch – I of the rules
3. Notice for calling AGM
4. Record date for Buy Back offer.
5. The Board will also approve the Declaration of Solvency in the Form SH – 9 and be verified by an affidavit, and signed by atleast two directors of the company, as required to be done by section 68(6).
2. Convene a general meeting & pass a special resolution u/s 68(2)(b) for buy back of shares.
3. Filing of resolution in prescribed Form MGT – 14 with concerning ROC.
4. Preparation and approval of the Board for letter for buy-back of shares.
5. Fixing the record date for buy-back offer.
6. Filing of letter of offer with the concerned ROC in the Form SH-8 alongwith the declaration of solvency in the Form SH – 9 before dispatching of the same to the members.
7. Dispatch the letter of letter to all the members with in 21 days from the date after filing with ROC.
8. The letter of Offer shall be open for open for exercise for not less than 15 days and not more than 30 days from the date of dispatch of letter of offer.
9. After verification of option, finalise the buy-back of shares with in 14 days from the date of the closure of letter of offer. If the option have been exercised by the members for higher number of shares than the offer have been made, then it shall be accepted by the company proportionately. If company has not rejected any application within 21 days from the closure of the letter of offer it will be deemed to have been accepted.
10. Open immediately a separate account & deposit the entire amount in that account.
11. Make payment of consideration within 7 days form the finalising of the buy-back.
12. Destroy all the shares certificates within 7 days, from the last of completion of buy-back ( sec 68(7)).
13. Submit a certificate in the Form SH – 15, obtained from two directors including for completion and destruction of shares, with the Registrar.
14. File a return of buy-back in prescribed Form SH-11 with the Registrar with in 30 days from the completion of buy-back (sec 68(10)).
15. If buy-back has been out of free reserves, a sum equal to the nominal value of securities bought back shall be credited in Capital Redemption Reserve account. This account can be utilized for issuance of fully paid up bonus shares. ( section 69 effective from 12.09.2013).
16. Payment of buy-back shall be made in cash only.
17. The company shall appoint a compliance officer for compliance with the buy-back regulations.
Santosh Bangar
Ratan Marwah
Santosh Bangar
Ratan Marwah
Santosh Bangar
Naveen Kumar
Santosh ji, Board of directors can approve buy-back up to 10% of the total paid-up equity capital and free reserve by means of the Board resolution and Shareholders can approve buy-back up to 25% of the total paid-up capital by a special resolution.....
Santosh Bangar
Ratan Marwah
In your specific caseIf u ll go for 9% buy back then each shareholder ll given opportunity of buy back of 4.5%. Then one shareholder ll surrender 4.5% shares only and another ll not take benefit of this scheme... So u have to issue buy back scheme for atleast 18 % so that the eligible shareholder can surrender 9 % share.
Thanks & Regards
Deshratan Marwah@yahoo
CS, LL.B
9873 477 484
Santosh Bangar
Santosh Bangar
Santosh Bangar
Can anyone reply to trailing mail.
Ratan Marwah
Santosh Bangar
I would appreciate your concern