Section 68(1) of the new Act, deals with the issue of ‘buy-back’. The corresponding provision in the old Act is Section 77A. After a comparison of old Act and Rules as well as new Act and Rules, it is evident that there has been no significant change in the laws regarding buy-back. The changes have only been in terms of (a) the procedure of odd-lots applicable to listed stocks, has been done away with and (b) the punishment for contravening the section has been enhanced. The old Act provided that any offer of buy-back cannot be made within a period of 365 days reckoned from the date of the preceding offer of buy-back. Under the new Act, this period of 365 days has been provided as one year which has to be reckoned from the date of the closure of the preceding offer of buy-back. Furthermore, Rule 17 of the Companies (Share Capital and Debentures) Rules, 2014 also makes certain deviations from the erstwhile Private Limited Company and Unlisted Public company (Buy Back of Securities) Rules,1999 prescribed under the old Act in respect of buy-back. These are-
- Unlike the old Act, the new Act requires that a report addressed to the Board of directors by the company’s auditors should state that the audited accounts on the basis of which calculation for the purpose of buy-back is made, is not more than six months old from the date of the Offer Document;
- Rule 17(14) of the Companies (Share Capital and Debentures) Rules, 2014 requires that a Certificate of Compliance in respect of buy-back of securities has to be annexed to the return filed with the Registrar in Form No. SH.11. This Certificate of Compliance has to be signed by two directors of the company including the managing director, if any, certifying that the buy-back of securities has been made in compliance with the provisions of the Act and the rules made thereunder. The above requirement was there in the old Act.
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