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    Question

    X Ltd. successfully completed a buy-back of 20% of its

    paid-up equity capital and free reserves on June 1, 2025. The company intends to initiate a further buy-back of 5% on January 1, 2026. Is this legally permissible?
    A Yes, because the total buy-back is within the statutory limit of 25% Correct Answer Incorrect Answer
    B No, because no offer of buy-back shall be made within a period of one year from the date of closure of the preceding offer of buy-back. Correct Answer Incorrect Answer
    C Yes, provided a Special Resolution is passed at a general meeting of the company Correct Answer Incorrect Answer
    D No, because the second buy-back must be at least 10% to be valid. Correct Answer Incorrect Answer
    E Yes, if approved by the Board and Central Government permission is taken Correct Answer Incorrect Answer

    Solution

    As provided under Section 68 (2) g of the Companies Act, 2013, no offer of buy-back under this sub-section shall be made within a period of one year reckoned from the date of the closure of the preceding offer of buy-back, if any.   This means that after one buyback, the company cannot do another buy back before the end of another year.   Also note, The company shall not make a further issue and allotment of the same kind of securities as bought back within a period of 6 months, except by bonus issue or for discharge of subsisting obligations such as conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or debenture into equity shares. 

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