Procedure of Buy Back of Equity Shares in Pvt Ltd

Section 68, 69 & 70 of the Companies Act, 2013

Funds to be used:

1)      Free Reserves

2)      Securities Premium

3)      Proceeds that are generated out of issue of any shares or other specified securities

Separate bank Account:

1)      Company need to open a separate bank account for the purchase of shares

2)      Amount can be paid only in cash

3)      Company cannot borrow / used borrowed money from Financial Institution  Banks

Buy Back of Shares can be done :

1)      From Existing Shareholders

2)      From open market

3)      From employees to whom shares are issued thru ESOP / Sweat Equity

Approval of Board / Member (% of total paid up Capital and Free Reserves):

1)      Board approval in case if Buy Back is less than 10%

2)      Member approval thru Special Resolution if Buy Back exceeds 10% but less than 25%

Secretarial Scope of Work:

1)      Convene Board Meeting for Amendment in AOA, approval of Buy Back and Convening of EOGM

2)      Convene EOGM

3)      Opening of Separate Bank Account

4)      Upload of Offer Letter in SH 8 and declaration of solvency in SH 9

5)      Letter of Offer to be delivered to shareholders within 21 days from ROC filing

6)      Offer should be for 15 days to 30 days from dispatch of offer letter

7)      In case if company has received offer more than what was offered, buy back of shares to be done on proportionate basis

8)      If shareholder don’t send Rejection to offer within 15 days from closure of offer, it is deemed accepted

Post Buy Back Compliance:

1)      Maintain Register of Shares / Securities bought back (form SH 10)

2)      Within 7 days from completion of buy back, destroy physical certificates

3)      Certificate of Compliance (Form SH 15) duly signed by two Directors and counter signed by Company Secretary

4)      Returns (form SH 11) to be uploaded on MCA after completion of entire procedure

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eMinds Legal is a Corporate Law Firm based in Gurgaon, India specializing in Corporate Legal, Corporate Secretarial and Compliance. The Firm comprises of a team of Corporate Lawyers and Company Secretaries with in-depth subject matter knowledge and participative industry experience of over 15 years.

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