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CA Intermediate · Advanced Accounting · Buyback of Securities

Anand Ltd has 10,00,000 equity shares of Rs 10 each fully paid. The company passes a special resolution to buy back shares. Which of the following is the maximum number of shares it may buy back in a year under the 25% limit on the total equity shares, assuming other limits are not binding?

The company may buy back at most 2,50,000 shares in a year. The buyback of equity shares in any financial year cannot exceed 25% of the total paid-up equity capital, and 25% of 10,00,000 shares is 2,50,000.

  1. A1,00,000 shares
  2. B2,50,000 sharesCorrect
  3. C25,000 shares
  4. D4,00,000 shares

Explanation

The buyback in any financial year cannot exceed 25% of the total paid-up equity capital. 25% of 10,00,000 shares = 2,50,000 shares. 1,00,000 would be 10%, and 4,00,000 would be 40%, both not provided by the rule.

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