MAR 11, 2016

MCA amends rules related to Buy-Back

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MCA vide notification dated 9th March 2016 has amended the Companies (Share Capital and Debentures) Rules, 2014 through Companies (Share Capital and Debentures) Amendment Rules, 2016

Pursuant to the amendment , a relief has been provided to the Companies to buyback their shares or specified securities based on un-audited accounts not older than six months from the date of offer document which are subjected to limited review by the auditors of the company , where the audited accounts are more than six months old. As per the extant provisions, calculations for buyback can only be made based on audited accounts which are not more than six months old from the date of offer letter

The text of amendment is given below

In rule 17, in sub-rule (1), in clause (n), after sub-clause (iii), the following proviso shall be inserted, namely:-

"Provided that where the audited accounts are more than six months old, the calculations with reference to buy back shall be on the basis of un-audited accounts not older than six months from the date of offer document which are subjected to limited review by the auditors of the company."

Further MCA vide its order dated 10th March 2016 and in exercise of the powers conferred under the proviso to clause (d) of sub-section (2) of section 68 of the Companies Act, 2013 (18 of 2013) has notified that the debt to capital and free reserves ratio shall be 6:1 for government companies within the meaning of clause (45) of section 2 of the Companies Act, 2013 which carry on Non-Banking Finance Institution activities and Housing Finance activities

Click here to download the Notification

Click here to download the Order