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

The Board of Kaveri Foods Ltd proposes a buy-back that is 8% of its total paid-up equity capital and free reserves, and the articles authorise buy-backs. Without calling a general meeting, what can the company do?

The company can proceed on a Board resolution passed at a Board meeting. A special resolution at a general meeting is not required when the buy-back is ten per cent or less of the total paid-up equity capital and free reserves and the articles authorise it.

  1. AProceed on a Board resolution passed at a Board meeting, since the buy-back is ten per cent or lessCorrect
  2. BProceed only after an ordinary resolution of members
  3. CProceed only if the Central Government approves
  4. DProceed only if a special resolution is passed, whatever the size

Explanation

Under section 68(2)(b) proviso, a special resolution is not needed 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 by a resolution at its meeting. At 8%, the Board route applies, so the special resolution option is wrong.

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