New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    As per the Companies Act, 2013 when is a company

    prohibited from directly or indirectly purchasing its own shares or other specified securities?
    A Through any subsidiary company including its own subsidiary companies Correct Answer Incorrect Answer
    B Through any investment company or group of investment companies Correct Answer Incorrect Answer
    C In case of non-compliance of with the provisions of sections 92, 123, 127 and section 129 Correct Answer Incorrect Answer
    D All a, b & c Correct Answer Incorrect Answer
    E Both b & c Correct Answer Incorrect Answer

    Solution

    Section 70.Prohibition for buy-back in certain circumstances- (1) No company shall directly or indirectly purchase its own shares or other specified  securities— (a) through any subsidiary company  including its own subsidiary companies; (b) through any investment company or group of investment companies; or (c) if a default, is made by the company, in the repayment of  deposit accepted either before or after the commencement of this Act, interest payment thereon, redemption of debenture  or preference shares or payment of dividend  to any shareholder, or repayment of any term loan or interest payable thereon to any  financial institution ,  or  banking company: Provided that the buy-back is not prohibited, if the default is remedied and a period of three years has lapsed after such default ceased to subsist.

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