Buy-back of shares: conditions and statutory limits govern company repurchases, solvency declaration and capital gains tax treatment. Buy-back under the Companies Act, 1956 is permitted only where authorised by the articles and effected out of free reserves, the securities premium account, or proceeds of shares, subject to board and/or special shareholder resolution and a statutory cap on aggregate buy-back quantum. Only fully paid-up securities qualify, post-buy-back debt-equity limits must be observed, capital redemption reserve transfers and balance-sheet disclosure are required where relevant, and a verified declaration of solvency must be filed before the buy-back. Consideration received by shareholders is chargeable as capital gains.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Buy-back of shares: conditions and statutory limits govern company repurchases, solvency declaration and capital gains tax treatment.
Buy-back under the Companies Act, 1956 is permitted only where authorised by the articles and effected out of free reserves, the securities premium account, or proceeds of shares, subject to board and/or special shareholder resolution and a statutory cap on aggregate buy-back quantum. Only fully paid-up securities qualify, post-buy-back debt-equity limits must be observed, capital redemption reserve transfers and balance-sheet disclosure are required where relevant, and a verified declaration of solvency must be filed before the buy-back. Consideration received by shareholders is chargeable as capital gains.
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