Buy back of shares

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Geeta Karmani

Geeta Karmani (Querist)
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23 January 2012 please explain if Buy Back of shares means to reduction in authorized capital of a company.

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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23 January 2012 The phrase 'buyback of shares' means the buying of its shares or other securities by a company from the holders thereof. A company limited by shares or company limited by guarantee and having a share capital buys or purchases from its shareholders the shares issued by it, at a certain price and thereby returns the share capital to those shareholders. The share capital bought back has the effect of reduction of share capital to the extent of the face value of the shares bought back and there is cash outflow from the company to the extent of the price of the shares paid to the shareholders. A buyback of shares results into the shareholders, whose shares are bought, ceasing to be the members of the company. Their names are omitted from the Register of Members.

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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Charu Srivastava

Charu Srivastava (Expert)
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24 January 2012 No, Buy Back does not mean reduction in authorized capital.
It is simply buying the shares from the shareholders by the company to reduce public share holding.

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