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CMA Intermediate · Corporate Accounting and Auditing · Issue, Forfeiture, Rights, Bonus, Sweat Equity, ESOP and Buy-back of Shares

A company buys back its own equity shares under the Companies Act, 2013. Within what time must the shares so bought back be extinguished and physically destroyed?

Bought-back shares must be extinguished and physically destroyed within seven days of the last date of completion of the buy-back. The thirty-day limit applies to filing the return, and the one-year limit applies to completing the buy-back after the resolution.

  1. AWithin seven days of the last date of completion of the buy-backCorrect
  2. BWithin thirty days of the last date of completion of the buy-back
  3. CWithin six months of the last date of completion of the buy-back
  4. DWithin one year of the date of passing the special resolution

Explanation

Section 68(7) requires the company to extinguish and physically destroy the bought-back shares within seven days of the last date of completion of the buy-back. The thirty-day period is for filing the return with the Registrar, and one year is the time limit for completing the buy-back itself.

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