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CS Executive · Capital Market and Securities Laws · Buy-Back of Securities

After completing a buy-back of its equity shares, Lotus Pharma Ltd wants to make a fresh issue of equity shares within six months. Which of the following issues is permitted by section 68?

A bonus issue is permitted. After a buy-back, the company cannot make a further issue of the same kind of shares within six months, even by rights issue, except by bonus issue or to discharge subsisting obligations such as conversion of warrants, stock options, sweat equity or convertible securities.

  1. AA rights issue to existing shareholders
  2. BA preferential allotment to a promoter
  3. CA bonus issueCorrect
  4. DA public offer of equity shares

Explanation

Section 68(8) bars a further issue of the same kind of shares within six months of completing a buy-back, including a rights issue under section 62(1)(a). The exceptions are a bonus issue or discharge of subsisting obligations such as conversion of warrants, stock options, sweat equity or conversion of preference shares or debentures. Rights, preferential and public issues are not excepted.

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