In this article we will discuss about the provisions for prohibition of buy-back of shares. According to Section 77B of the Companies Act, no company shall, directly or indirectly, purchase its own shares or other specified securities: (а) Through any subsidiary company including its own subsidiary companies; or (b) Through any investment company or group of investment companies; or (c) [...]
In this article we will discuss about:- 1. Introduction to Buy-Back of Securities 2. Meaning of Buy-Back of Securities 3. Sources 4. Advantages. Introduction to Buy-Back of Securities: By virtue of section 77(1) of the Companies Act, 1956, a company limited by shares could not buy its own shares as the same would amount to illegal reduction of capital. This [...]
The conditions precedent to buy-back, as laid down in Section 77A (2) of the Companies Act are:- (a) The company's article should authorise the buy-back. In case the articles are silent on this point, the same has to be amended to include a provision to that effect; (b) No company shall purchase its own shares or other specified securities unless [...]