company account

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tinkesh kumar

tinkesh kumar (Querist)
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03 February 2011 can a company purchase his own equity share?
give reason.

CS ,CMA Shambhu Kr. jha

CS ,CMA Shambhu Kr. jha (Expert)
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03 February 2011 Why a company need to purchase their own share . it is not possible any way except buy back of share and forfeiture of share only n that case company can buy back it's own share it is treated that company has bought it's own share .
However it's not possible in the case of fresh issue of share .

tinkesh kumar

tinkesh kumar (Querist)
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04 February 2011 but section 77A of the companies act says that company may purchase his own equity share

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RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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04 February 2011 A company may have different reasons for wanting to purchase its own shares depending on whether there is an existing active market in its shares. There would be little or no active market in the shares of a very small private company such as one which is in substance an incorporated partnership, although there may be a limited market in the shares of a larger private company.The Companies Act 1985 allows a limited1 company to purchase its own shares. Any type of share can be purchased under this power. A company may also issue shares on terms which provide for later redemption by the company..

FOR MORE INFO:-
http://www.proeconomics.com/law/company/reasons__why_a_company_may_want_to__purchase__its_own__shares_or_issue__redeemable__shares.html