(1) limited by shares or by guarantee and having a capital shall have power to buy its own shares unless the consequent reduction of share capital is effected under the provisions of this Act.
(2) No 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 .
(3) Nothing in sub-section (2) shall apply to—
(a) the lending of money by a in the ordinary course of its business;
(b) the provision by a company of money in accordance with any scheme approved by company through special resolution and in accordance with such requirements , for the purchase of, or subscription for, fully paid-up shares in the company or its holding company, if the purchase of, or the subscription for, the shares held by trustees for the benefit of the employees or such shares held by the employee of the company;
(c) the giving of loans by a company to persons in the employment of the company other than its or , for an amount not exceeding their salary or wages for a period of six months with a view to enabling them to purchase or subscribe for fully paid-up shares in the company or its holding company to be held by them by way of beneficial ownership:
Provided that disclosures in respect of not exercised directly by the employees in respect of shares to which the scheme relates shall be made in the Board’s report in such manner
(4) Nothing in this section shall affect the right of a company to redeem any preference shares issued by it under this Act or under any .
(5) If a company contravenes the provisions of this section, it shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every of the company who is in default shall be punishable with imprisonment for a term which may extend to three years and with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees.
(a) in whose share capital no other body corporate has invested any money;
(b) if the borrowings of such a company from banks or financial institutions or any body corporate is less than twice its paid up share capital or fifty crore rupees, whichever is lower; and
(c) such a company is not in default in repayment of such borrowings subsisting at the time of making transactions under this section vide Notification no. G.S.R. 464(E) dated 5th June, 2015 and GSR 08(E) dated 4th January, 2017.
(The exceptions, modifications and adaptations provided above shall be applicable only to those Private Companies which has not committed a default in filing its financial statements under section 137 of the said act or annual return under section 92 of the said act with the registrar, vide notification dated 13th June 2017)
To view the notification,Click Here
2)Section 67(1) shall not apply to nidhi companies, when shares are purchased by the company from a member on his ceasing to be a depositor or borrower and it shall not be considered as reduction of capital, under section 66 of the Companies Act, 2013. Refer notification no. G.S.R. 465(E) dated 5th June 2015. To view the notifications,Click Here
(a) is not a private company; and
(b) has a minimum paid-up share capital, as may be prescribed:
Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles
Explanation.- For the purposes of this clause, the expression “company” includes any body corporate;
(i) the Chief Executive Officer or the managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer;
(v) such other officer, not more than one level below the directors who is in whole-time employment, designated as key managerial personnel by the Board; and
(vi) such other officer as may be prescribed;
(i) Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866);
(ii) the Indian Companies Act, 1866 (10 of 1866);
(iii) the Indian Companies Act, 1882 (6 of 1882);
(iv) the Indian Companies Act, 1913 (7 of 1913);
(v) the Registration of Transferred Companies Ordinance, 1942 (Ord. 54 of 1942);
(vi) the Companies Act, 1956 (1 of 1956); and
(vii) any law corresponding to any of the aforesaid Acts or the Ordinances and in force—
(A) in the merged territories or in a Part B State (other than the State of Jammu and Kashmir), or any part thereof, before the extension thereto of the Indian Companies Act, 1913 (7 of 1913); or
(B) in the State of Jammu and Kashmir, or any part thereof, before the commencement of the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), in so far as banking, insurance and financial corporations are concerned, and before the commencement of the Central Laws (Extension to Jammu and Kashmir) Act, 1968 (25 of 1968), in so far as other corporations are concerned;
(viii) the Portuguese Commercial Code, in so far as it relates to sociedades anonimas; and
(ix) the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961)(Not notified)
4.1.16 -Companies (Share Capital and Debentures) Rules, 2014.
16. Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees.-
(1) The company shall not make a provision of money for the purchase of, or subscription for, shares in the company or its holding company, if the purchase of, or the subscription for, the shares by trustees is for the shares to be held by or for the benefit of the employees of the company, unless it complies with the following conditions, namely:-
(a) the scheme of provision of money for purchase of or subscription for the shares as aforesaid is approved by the members by passing special resolution in a general meeting;
(b) such purchase of shares shall be made only through a recognized stock exchange in case the shares of the company are listed and not by way of private offers or arrangements;
(c) where shares of a company are not listed on a recognized stock exchange, the valuation at which shares are to be purchased shall be made by a registered valuer;
(d) the value of shares to be purchased or subscribed in the aggregate together with the money provided by the company shall not exceed five per cent. of the aggregate of paid up capital and free reserves of the company;
(2) The explanatory statement to be annexed to the notice of the general meeting to be convened pursuant to section 102 shall, in addition to the particulars mentioned in sub-rule (1) of rule 18, contain the following particulars, namely:-
(a) the class of employees for whose benefit the scheme is being implemented and money is being provided for purchase of or subscription to shares;
(b) the particulars of the trustee or employees in whose favor such shares are to be registered;
(c) the particulars of trust and name, address, occupation and nationality of trustees and their relationship with the promoters, directors or key managerial personnel, if any;
(d) the any interest of key managerial personnel, directors or promoters in such scheme or trust and effect thereof;
(e) the detailed particulars of benefits which will accrue to the employees from the implementation of the scheme;
(f) the details about who would exercise and how the in respect of the shares to be purchased or subscribed under the scheme would be exercised;
(3) A person shall not be appointed as a trustee to hold such shares, if he
(a) is a director, key managerial personnel or promoter of the company or its holding, subsidiary or associate company or any relative of such director, key managerial personnel or promoter; or
(b) beneficially holds ten percent or more of the paid-up share capital of the company.
(4) Where the voting rights are not exercised directly by the employees in respect of shares to which the scheme relates, the Board of Directors shall, inter alia, disclose in the Board’s report for the relevant financial year the following details, namely:-
(a) the names of the employees who have not exercised the voting rights directly;
(b) the reasons for not voting directly;
(c) the name of the person who is exercising such voting rights;
(d) the number of shares held by or in favour of, such employees and the percentage of such shares to the total paid up share capital of the company;
(e) the date of the general meeting in which such voting power was exercised;
(f) the resolutions on which votes have been cast by persons holding such voting power;
(g) the percentage of such voting power to the total voting power on each resolution;
(h) whether the votes were cast in favour of or against the resolution.
Enforcement Notification S.O. 902(E) dated 26/03/2014
Exemption to Nidhi Companies [G.S.R 465(E)] dated 05/06/2015
Exemption to Specified IFSC Public company [GSR 08(E)] dated 04/01/2017
Exemptions to Private Companies [Amendment to GSR 464(E)] dated 13/06/2017