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

Kaveri Textiles Ltd, a listed company, has its Board pass a resolution at a meeting to buy back shares worth 8% of its total paid-up equity capital and free reserves. Its articles authorise buy-back. What is the position under the Companies Act, 2013?

The Board resolution is sufficient. Where the buy-back is ten per cent or less of the total paid-up equity capital and free reserves and the Board authorises it at a meeting, no special resolution at a general meeting is needed, provided the articles authorise buy-back.

  1. AA special resolution at a general meeting is mandatory in every case
  2. BThe Board resolution is sufficient because the buy-back is ten per cent or less of paid-up equity capital and free reservesCorrect
  3. CBoard approval is never enough for a listed company
  4. DApproval of the Registrar must be obtained before the Board resolution

Explanation

The proviso to section 68(2)(b) dispenses with the special resolution where the buy-back is ten per cent or less of total paid-up equity capital and free reserves and the Board has authorised it at its meeting. At 8%, the condition is met. The option demanding a special resolution in every case ignores this proviso.

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