TMI BlogCORPORATE RESTRUCTURING – BUY BACK OF SHARESX X X X Extracts X X X X X X X X Extracts X X X X ..... eting of the company authorizing the buy-back. Objective of Buy Back The reasons for buy- back may be one or more of the following: To improve earnings per share To improve return on capital, return on net worth and to enhance the long term shareholder value To provide an additional exit route to shareholders when shares are under valued or are thinly traded To enhance consolidation of stake in the company To prevent unwelcome takeover bids To return surplus cash to shareholders To achieve optimum capital structure To support share price during periods of sluggish market conditions To service the equity more efficiently. Authority and Quantum of Buy back of Securities 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80(1)(d)], a sum equal to nominal amount of the shares bought back and the details of such transfer and should be disclosed in the balance sheet - Section 77AA Where a company completes a buy-back of its shares or other specified securities under this section, it shall not make further issue of the same kind of shares including allotment of further shares under section 81(1)(a) or other specified securities within a period of six months except by way of bonus issue or in the discharge of subsisting obligations such as conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or debentures into equity shares. Section 77A (8) No buy back of securities should be undertaken while a petition for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia a declaration of solvency in the form as may be prescribed, and verified by an affidavit to the effect that the Board has made a full inquiry into the affairs of the company as a result of which they have formed an opinion that it is capable of meeting its liabilities and will not be rendered insolvent within a period of one year of the date of declaration adopted by the Board, and signed by at least two directors of the company, one of whom shall be the managing director. Income Tax Aspects Section 46A of Income tax Act provides that where a shareholder or a holder of other specified securities the meaning assigned to it in section 77A of the Companies Act, 1956, receives any consideration from any company for pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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