(i) Its free reserves; or
(ii) The Securities Premium Account; or
(iii) The proceeds of any shares or other specified securities [Section 77A(1)] Money borrowed from Banks/Financial Institutions should not be utilized for the purpose of buying back [Rule 8(1)(e)].
buy back of equity shares in any financial year does not exceed 25% of your company’s total paid-up equity capital in that financial year. [Section 77A(2)(c) Proviso]
(ii) All shares or other specified securities which are to be bought back are all fully paid up [Section 77A(20(e)].
The Explanatory Statement should contain:
(i) a full and complete disclosure of all material facts;
(ii) the necessity for the buy back;
(iii) the class of security intended to be purchased under the buy back;
(iv) the amount to be invested under the buy back; and
(v) the time limit for completion of buy back [not exceeding 12 months from the date of passing of the special resolution] [Section 77A(3) and (4)].
A draft letter of offer [contents in Schedule II, Rule 8(1)] should be filed with ROC subsequent to the passing of the special resolution but before the buy back [Rule 5(1)] along with a declaration of solvency in Form No. 4A [Rule 5(2)]. The same letter is to be dispatched to the shareholders whose shares are being bought back immediately after filing it with ROC but not later than 21 days of such filing.
The offer should not be withdrawn once the draft letter of offer has been filed with the ROC [Rule 8(1)(d)].
(i) Description of securities bought back by the company;
(ii) Particulars relating to holders of securities before buy back;
(iii) Copy of the special resolution passed at the general meeting;
(iv) Copy of board resolution.
Certificate regarding the same is to be filed with the ROC within 7 days of extinguishment [Rule 10(2)]. Certificate is to be verified by two whole-time directors including the managing director and company secretary in whole time practice certifying compliance [Rule 10(2)].