10 August 2009
A listed company passed a special resolution in its Annual General meeting for buy back of shares. It did not implement the said resolution. Will the action of the company stand legal scrutiny?
As per my opinion failure to complete buy back in time is not a case of legal scrutiny because there are enough provisions in law for the reporting of such failure. Kindly appreciate: The Time-limits for completion of buy-back: The buy-back is expected to be completed within 12 months from the date of passing of the Special Resolution as permitted under the Companies Act, 1956. Although the Company will endeavour to complete the process at an early date.
DISCLOSURE FOR FAILURE TO COMPLETE BUY-BACK WITHIN TIME
Sub-section (2B) to section 217 requires to specify in the Directors' Report the reasons for failure, if any, to complete buy-back within 12 months as specified in section 77A(4) of the Companies Act. CONSEQUENCES FOR NON COMPLIANCE
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.
CAclubindia
