23 July 2009
If a listed company passes a special resolution in its annual general meeting for buy back of its shares but does not implement the said resolution.Will the actions of the company stand to legal scrutiny?
The time limit for completion of Buy-Back: The buy-back is expected to be completed within 12 months from the date of passing the special resolution as permitted under the Companies Act, 1956, though the Company will endeavour to complete the process at an early date.
If for any reason, the buy-back could not be completed within 12 months, the Board of Directors should give the reasons for the failure to complete the buy-back within the time specified, in the Director’s Report to shareholders.
There is no such express provisions regarding actions of the company stand to legal scrutiny. However it depends on the ROC.
PENAL PROVISIONS U/S 77A (11)
If a company makes default in complying with the provisions of this section or rules made there under, or any regulation made under clause (f) of Sec.77A (2), the company and any officer, who is default, shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to Rs. 50,000 /- or with both.
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