buy back of shares

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Querist : Anonymous

Querist : Anonymous (Querist)

08 September 2010 Can security premium be used for amount to be transferred to the Capital Redemption Reserve?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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08 September 2010 yes

Querist : Anonymous

Querist : Anonymous (Querist)

08 September 2010 thanks,

i was bit confused, as section 78 of the Indian Companies Act, 1956 restricts the uses of security premium (issue of bonus shares, redemption premium, w.off preliminary expenses, w.off expenses on issue of securities.)..

While section 77A, states that a company can buy back its shares out of free reserves, security premium or new issue....

Then, i got clear, that when security premium is transferred to Capital Redemption Reserve, it shall be used only for issue of bonus shares... (both section 77A and 78 are complied with)

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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08 September 2010 I answered taking into account that section 77A, states that a company can buy back its shares out of free reserves, security premium or new issue.