law: Companies Act, 1956
  Sec 77    -    
  
  Restrictions on purchase by company, or loans by company for purchase, of its
  
  own or its holding company's shares 
  (1) No company limited by shares, and no
  
  company limited by guarantee and having a share capital, shall have power to
  
  buy its own shares, unless the consequent reduction of capital is effected and
  
  sanctioned in pursuance of sections 100 to 104 or of section 402.
  (2) No public company, and no private company
  
  which is a subsidiary of a public company, shall give, whether directly or
  
  indirectly, and whether by means of a loan, guarantee, the provision of
  
  security or otherwise, any financial assistance for the purpose of or in
  
  connection with a purchase or subscription made or to be made by any person of
  
  or for any shares in the company or in its holding company :
  Provided  that nothing in this sub-section shall
  
  be taken to prohibit :
  (a) the lending of money by a banking company
  
  in the ordinary course of its business ; or
  (b) the provision by a company, in accordance
  
  with any scheme for the time being in force, of money for the purchase of, or
  
  subscription for, fully paid shares in the company or its holding company,
  
  being a purchase or subscription by trustees of or for shares to be held by or
  
  for the benefit of employees of the company, including any director holding a
  
  salaried office or employment in the company ; or
  (c) the making by a company of loans, within
  
  the limit laid down in sub-section (3), to persons (other than directors or
  
  managers) bonafide in the employment of the company with a view to enabling
  
  those persons to purchase or subscribe for fully paid shares in the company or
  
  its holding company to be held by themselves by way of beneficial ownership.
  (3) No loan made to any person in pursuance of
  
  clause (c) of the foregoing proviso shall exceed in amount his salary or wages
  
  at that time for a period of six months.
  (4) If a company acts in contravention of
  
  sub-sections (1) to (3), the company, and every officer of the company who is
  
  in default, shall be punishable with fine which may extend to ten thousand
  
  rupees.
  (5) Nothing in this section shall affect the
  
  right of a company to redeem any shares issued under section 80 or under any
  
  corresponding provision in any previous companies law.