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

Board of Meera Pharma Ltd, a listed company, plans a buy-back that is within ten per cent of its total paid-up equity capital and free reserves. Which statement is correct as to authorisation?

The Board can authorise it at its meeting. The articles must permit buy-back, but where the buy-back is ten per cent or less of paid-up equity capital and free reserves, a Board resolution suffices and no special resolution is needed.

  1. AA special resolution at a general meeting is always compulsory
  2. BThe Board may authorise it by a resolution passed at its meeting, provided the buy-back is authorised by the articlesCorrect
  3. CNo authorisation is needed from the Board or members
  4. DApproval of the Registrar must be obtained before the Board meeting

Explanation

Section 68(2) requires that the buy-back be authorised by the articles. The proviso to clause (b) dispenses with the special resolution where the buy-back is ten per cent or less of paid-up equity capital and free reserves and the Board authorises it by a resolution at its meeting. Hence a special resolution is not always compulsory.

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