According to Section 68 of the Companies Act, 2013, a company can buy back its own shares when which of the following conditions is satisfied?
- AThe debt - Equity ratio is not more than after the buy back.
- BThe amount of buy back shares in any financial year does not exceed of the paid-up capital and free reserves.
- CPartly paid up shares are considered for buy back.
- DArticles of Association must authorise and a special resolution has been passed for the buy back of shares in the general meeting.
Solution & Step-by-step Explanation
Let's assess the legal mandates for a share buyback under the Companies Act, 2013:Post-buyback Debt-to-Equity ratio limit must not exceed (not ).The maximum buyback cap in a year is of paid-up capital and free reserves (not ).Shares intended for buyback must be fully paid up (not partly paid up).True Mandate: The buyback must be explicitly authorized by the company's Articles of Association (AOA), and a special resolution must be passed in the general meeting.