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    Buy Back

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    kalyanikamineni
    The document discusses equity shares, differential rights of shares, buyback of shares and securities by companies. It outlines the relevant sections of the Companies Act and rules regarding conditions for buyback such as authorization, maximum percentage, time between buybacks and prohibitions. It also mentions SEBI conditions for buyback offers from the open market.

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    Buy Back

    Uploaded by

    kalyanikamineni
    22 views5 pages
    The document discusses equity shares, differential rights of shares, buyback of shares and securities by companies. It outlines the relevant sections of the Companies Act and rules regarding conditions for buyback such as authorization, maximum percentage, time between buybacks and prohibitions. It also mentions SEBI conditions for buyback offers from the open market.

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    BUY BACK

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    The document discusses equity shares, differential rights of shares, buyback of shares and securities by companies. It outlines the relevant sections of the Companies Act and rules regarding conditions for buyback such as authorization, maximum percentage, time between buybacks and prohibitions. It also mentions SEBI conditions for buyback offers from the open market.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    22 views5 pages

    Buy Back

    Uploaded by

    kalyanikamineni
    The document discusses equity shares, differential rights of shares, buyback of shares and securities by companies. It outlines the relevant sections of the Companies Act and rules regarding conditions for buyback such as authorization, maximum percentage, time between buybacks and prohibitions. It also mentions SEBI conditions for buyback offers from the open market.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    Buyback of Securities and Equity Shares with Differential Shares

    About Equity Share!

    Equity share

    Owners of the company

    With voting rights

    With differential rights

    Share

    Equity Preference
    Shares Shares

    Differential Rights w.r.t:


    a. Superior rate of
    No differentiation
    dividend
    can be made
    b. Superior/diluted
    rate of voting
    BuyBack Means Purchase back

    Companies Act and Rules, 2013


    Section 68(1):

    A company may purchase back:

    ▪ Its own shares or

    ▪ Other specified securities such as, employee stock option, out of:

    [a] Capitalization of free


    reserves (including

    securities premium) Combination of


    [a] & [b]

    [b] Proceeds of fresh


    issue

    No such shares shall be bought back unless they are fully paid
    Section 68(2) - Conditions for Buyback
    Authorised by its : Articles of Association

    Special resolution : at General Meeting

    Maximum buyback with : - BOD < = 10%

    - BOD and Members < = 25%

    Reckoned on Paid up Capital and Free Reserves

    Post buyback : Debt : Equity = 2:1

    TIME between buybacks > 1YEAR

    Multiple ways for Buyback of Shares


    Section 68(5)

    Proportionate purchase from


    the existing shareholders

    OR
    May be
    Open market
    BuyBack through
    OR
    Purchase of Employee Stock
    Option (ESOPs)
    DOs & DON’Ts

    To the outsider

    i.e., fresh issue


    Issue of same
    class of shares
    or specified
    securities To the existing
    shareholder

    To the outsider

    Issue of other i.e., fresh issue


    class of shares
    or specified
    securities
    To the existing
    shareholder

    Bonus issue

    Conversion of warrants
    Issue of same
    class of shares
    or specified
    Stock option
    securities
    or

    Conversion of preference shares


    or debentures
    Prohibitions

    Purchase for investment through:

    • any subsidiary or its subsidiary company

    • or an investment company

    • or group of investment companies

    Purchase/buyback, if;

    • Default subsists in either or all of the below:

    • Repayment of deposits

    • Redemption of debenture or preference shares

    • Payment of interest or dividend within due dates

    • Filing of annual returns

    • Preparation of financials statement

    SEBI Conditions

    I] 15% of
    Buyback offer [Paid-up
    from the open Less than Capital
    market +
    Free Reserve]

    II]
    Buyback 1YEAR Buyback

    III] Minimum 50% of Buyback


    fund allocated Used for

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