provisions of purchase-back of shares

Question

Write down the provisions of purchase back of shares as said by Companies Act, 1956?

Answer 1

The provision of purchase back of shares as said by Companies Act, 1956 the shares should be bought by the company because of subsequent reasons they are illustrated below:-

i) Promoters grasp increase and increment in earning per share

ii) Support of share value and to pay additional cash won't be needed by the business

The resources that have to be employed in purchase back can be purchased from:-

i) Free reserves: - in this company buy its own shares out of the left out, then by doing this sum equivalent to nominal value of share that has been purchased acquires transferred to the capital redemption reserve.

ii) Security premium account :- in this company can't purchase back its own shares or other security related matters.

The purchase back period by that it has to be finished is in twelve months from the date of passing the case. In this also the company is not responsible to indirectly or directly purchase its own shares or other securities issue.