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CMA Intermediate · Corporate Accounting and Auditing · Issue, Forfeiture, Rights, Bonus, Sweat Equity, ESOP and Buy-back of Shares

Under the Companies Act, 2013, section 68(8), after a company completes a buy-back it cannot make a further issue of the same kind of shares for six months. Which issue is expressly excepted?

A bonus issue is expressly excepted. Section 68(8) bars a fresh issue of the same kind of shares for six months after a buy-back, except a bonus issue or discharge of subsisting obligations such as warrants, stock options or sweat equity.

  1. AA rights issue to existing shareholders
  2. BA public issue of fresh equity shares
  3. CA bonus issueCorrect
  4. DA private placement 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, except by way of a bonus issue or in discharge of subsisting obligations such as conversion of warrants, stock options, sweat equity or conversion of preference shares or debentures. Rights issues are specifically covered by the bar (section 62(1)(a)).

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