Buyback of Shares by Unlisted Companies.

1. BUYBACK OF SHARES BY UNLISTED COMPANIES
- CS KINNAR SHAH

3. Meaning of Buyback: -
Acquire the shares by the Company from existing shareholders within a given timeframe.
Why Buyback of Shares by the Company: -
1. To Tax-free Rewards to Share holders of the Company.
2. To Improve Valuation of The Company.
3. To Improve Fundamental Health of the Company by increasing EPS of the Company.
Source of Buyback: -
A Company can make buyback from following:
1. Free Reserve
2. Security Premium Account
3. Proceeds of Issue of any Shares
Conditions for Buyback: -
1. Approval of BOD- < 10% of P.C. + F.R. & Approval of Shareholders- 25% > 10% of P.C. + F.R.
2. Provision in AOA must be there, if not then alter AOA
3. Post buyback ratio of Debt-Equity will be 2:1.
4. Buyback should be completed within 1 year from the date of Resolution.
5. The Company can’t issue same category of shares within 6 months from the completion of Buyback except
Bonus Issue.
6. No withdrawal is allowed once it’s announced to Shareholders.

6. Buyback from Existing Shareholders Process in case of Unlisted Companies: -
1. Conducting Board Meeting for:
- Approving Accounts (not older than 6 months) along with Limited Review Report.
- Approving Valuation Report.
- Approving New Bank Escrow Account & Notice of EGM.
2. Conducting EGM for the approval of Buyback & file Resolution in MGT-14 within 30 days.
3. Conducting Board Meeting for:
- Approving letter of offer ( SH-8)
- Approving Declaration of Solvency (SH-9)
4. File letter of offer to ROC & dispatch the same to Share-holders within 20 days.
5. After dispatching Letter of offer, Offer Period will be started for 15 to Max. 30 Days. The Company can close
offer period before 15 days subject to consent of all the members.
6. Share holders can verify the offer within 15 days from the closure of offer & Accept the offer within 21 days
from the closure of offer.
7. Tendered Buyback amount shall be deposited in the Escrow Account immediately after the closure of offer.

7. 8. Within 7 Days from the acceptance of offer payment should be done to Share-holders.
9. Physical Share Certificate must have to destroy within 7 days from the completion of Buyback.
10. File Return of Buyback within 30 days from the completion of Buyback in Form SH-11.
11. Certificate of Buyback in SH-15.
12. Maintain register of Buyback in SH – 10.
13. Nominal value of the shares so purchased shall be transferred to the capital redemption reserve account.

8. Restriction on buyback of Shares : -
1. If default in the repayment of deposit/debentures/preference shares/loan/dividend/interest.
2. If default in filing of Annual Return or financial statement.
3. Through it’s Investment Company.
4. Through it’s Subsidiary Company.