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    Question

    According to the provisions of the Companies Act, can a

    company buy back shares or specified securities from the proceeds of an earlier issue of the same kind?
    A Yes, a company can buy back shares from the proceeds of an earlier issue of the same kind Correct Answer Incorrect Answer
    B No, a company cannot buy back shares or specified securities from the proceeds of an earlier issue of the same kind Correct Answer Incorrect Answer
    C A company can only buy back shares from the proceeds of debentures issued earlier Correct Answer Incorrect Answer
    D A company can buy back shares from the proceeds of the same kind of shares with shareholder approval Correct Answer Incorrect Answer
    E A company can buy back shares without restrictions on the source of funds. Correct Answer Incorrect Answer

    Solution

    Section 68.Power of company to purchase its own securities: (1) Notwithstanding anything contained in this Act, but subject to the provisions of sub-section (2), a companyĀ  may purchase its own shares or other specifiedĀ  securitiesĀ  (hereinafter referred to as buy-back) out ofā€” (a) itsĀ  free reserves; (b) the securities premium account; or (c) the proceeds of the issue of any shares or other specified securities: Provided that no buy-back of any kind of shares or other specified securities shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities.

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