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What are the provisions of buy back of shares as per Companies Act, 1956?
The provision of buy back of shares as per Companies Act, 1956 the shares must be bought by the company due to following reasons they are as follows:-
1) Promoters hold increment and increment in earning per share
2) Support of share value and to pay surplus cash won't be required by the business
The resources which have to be used in buy back can be purchased from:-
1) Free reserves :- in this company purchase its own shares out of the left out, then by doing this sum equal to nominal value of share which has been purchased gets transferred to the capital redemption reserve.
2) Security premium account :- in this company can't buy back its own shares or other security related issues.
The buy back period by which it has to be finished is within 12 months from the date of passing the case. In this also the company is not liable to directly or indirectly purchase its own shares or other securities issue.
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