law: Companies Act, 2013 
  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 company may purchase its own shares or other specified securities
  
  (hereinafter referred to as buy-back) out of—
  a.     
  
    its
  
  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.
  1.     
  2.      No company shall
  
  purchase its own shares or other specified securities under sub-section (1 ),
  
  unless—
  a.     
  
    the
  
  buy-back is authorised by its articles;
  b.    
  
    a
  
  special resolution has been passed at a general meeting of the company
  
  authorising the buy-back:
  Provided
  
  that nothing contained in this clause shall apply to a case where—
                       
  
   i.        
  
    the
  
  buy-back is, ten per cent. or less of the total paid-up equity capital and free
  
  reserves of the company; and
                      
  
   ii.        
  
    such
  
  buy-back has been authorised by the Board by means of a resolution passed at
  
  its meeting;
  a.     
  
  
  b.     
  
  
  c.     
  
    the
  
  buy-back is twenty-five per cent. or less of the aggregate of paid-up capital
  
  and free reserves of the company:
  Provided
  
  that in respect of the buy-back of equity shares in any financial year, the
  
  reference to twenty-five per cent. in this clause shall be construed with
  
  respect to its total paid-up equity capital in that financial year;
  a.    
  
  
  b.    
  
  
  c.    
  
  
  d.    
  
    the
  
  ratio of the aggregate of secured and unsecured debts owed by the company after
  
  buy-back is not more than twice the paid-up capital and its free reserves:
  Provided
  
  that the Central Government may, by order, notify a higher ratio of the debt to
  
  capital and free reserves for a class or classes of companies;
  a.     
  
  
  b.     
  
  
  c.     
  
  
  d.     
  
  
  e.     
  
    all
  
  the shares or other specified securities for buy-back are fully paid-up;
  f.     
  
    the
  
  buy-back of the shares or other specified securities listed on any recognized
  
  stock exchange is in accordance with the regulations made by the Securities and
  
  Exchange Board in this behalf; and
  g.    
  
    the
  
  buy-back in respect of shares or other specified securities other than those
  
  specified in clause (f ) is in accordance with such rules as may be
  
  prescribed:
  Provided
  
  that 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.
  3.      The notice of the
  
  meeting at which the special resolution is proposed to be passed under clause (b )
  
  of sub-section (2 ) shall be accompanied by an explanatory statement
  
  stating—
  a.     
  
    a
  
  full and complete disclosure of all material facts;
  b.    
  
    the
  
  necessity for the buy-back;
  c.     
  
    the
  
  class of shares or securities intended to be purchased under the buy-back;
  d.    
  
    the
  
  amount to be invested under the buy-back; and
  e.     
  
    the
  
  time-limit for completion of buy-back.
  1.     
  2.     
  3.     
  4.      Every buy-back shall
  
  be completed within a period of one year from the date of passing of the
  
  special resolution, or as the case may be, the resolution passed by the Board
  
  under clause (b ) of sub-section (2 ).
  5.      The buy-back under
  
  sub-section (1 ) may be—
  a.     
  
    from
  
  the existing shareholders or security holders on a proportionate basis;
  b.    
  
    from
  
  the open market;
  c.     
  
    by
  
  purchasing the securities issued to employees of the company pursuant to a
  
  scheme of stock option or sweat equity.
  1.     
  2.     
  3.     
  4.     
  5.     
  6.      Where a company
  
  proposes to buy-back its own shares or other specified securities under this
  
  section in pursuance of a special resolution under clause (b ) of
  
  sub-section (2 ) or a resolution under item (ii ) of the proviso
  
  thereto, it shall, before making such buy-back, file with the Registrar and the
  
  Securities and Exchange Board, a declaration of solvency signed by at least two
  
  directors of the company, one of whom shall be the managing director, if any,
  
  in such form as may be prescribed and verified by an affidavit to the effect
  
  that the Board of Directors of the company has made a full inquiry into the
  
  affairs of the company as a result of which they have formed an opinion that it
  
  is capable of meeting its liabilities and will not be rendered insolvent within
  
  a period of one year from the date of declaration adopted by the Board:
  Provided
  
  that no declaration of solvency shall be filed with the Securities and Exchange
  
  Board by a company whose shares are not listed on any recognised stock
  
  exchange.
  1.     
  2.     
  3.     
  4.     
  5.     
  6.     
  7.      Where a company buys
  
  back its own shares or other specified securities, it shall extinguish and
  
  physically destroy the shares or securities so bought back within seven days of
  
  the last date of completion of buy-back.
  8.      Where a company
  
  completes a buy-back of its shares or other specified securities under this
  
  section, it shall not make a further issue of the same kind of shares or other
  
  securities including allotment of new shares under clause (a ) of
  
  sub-section (1 ) of section 62 or other specified securities within a
  
  period of six months except by way of a bonus issue or in the discharge of
  
  subsisting obligations such as conversion of warrants, stock option schemes,
  
  sweat equity or conversion of preference shares or debentures into equity
  
  shares.
  9.      Where a company buys
  
  back its shares or other specified securities under this section, it shall
  
  maintain a register of the shares or securities so bought, the consideration
  
  paid for the shares or securities bought back, the date of cancellation of
  
  shares or securities, the date of extinguishing and physically destroying the
  
  shares or securities and such other particulars as may be prescribed.
  10.   A company shall,
  
  after the completion of the buy-back under this section, file with the
  
  Registrar and the Securities and Exchange Board a return containing such
  
  particulars relating to the buy-back within thirty days of such completion, as
  
  may be prescribed:
  Provided
  
  that no return shall be filed with the Securities and Exchange Board by a
  
  company whose shares are not listed on any recognised stock exchange.
  1.  
  2.  
  3.  
  4.  
  5.  
  6.  
  7.  
  8.  
  9.  
  10.  
  11.   If a company makes
  
  any default in complying with the provisions of this section or any regulation
  
  made by the Securities and Exchange Board, for the purposes of clause (f )
  
  of sub-section (2 ), the company shall be punishable with fine which
  
  shall not be less than one lakh rupees but which may extend to three lakh
  
  rupees and every officer of the company who is in default shall be punishable
  
  with imprisonment for a term which may extend to three years or with fine which
  
  shall not be less than one lakh rupees but which may extend to three lakh
  
  rupees, or with both.
  Explanation
  
  I.  —For
  
  the purposes of this section and section 70, “specified securities” includes
  
  employees’ stock option or other securities as may be notified by the Central
  
  Government from time to time.
  Explanation
  
  II  .—For
  
  the purposes of this section, “free reserves” includes securities premium
  
  account.