Buyback vs sec 66
Dhruv Rana (13 Points)
17 October 2020
anyone explain diffrence between buyback of share and reduction of share capital through return of excess money by company
Dhruv Rana (13 Points)
17 October 2020
ayusmita
(Tax consultant)
(5885 Points)
Replied 18 October 2020
i tell you the basic things regarding the buyback of share and reduction of share
the corporations act 2001 allow a company to reduce its share capital in two ways
share capital reduction
and buy back of share
CAPITAL REDUCTION
when a money paid to a company in respect of a members share is returned to the member or when certain shares are cancelled for nil consideration
there are certain rules also as per sec 256B WHAT THE REDUCTION SHOULD BE TO REDUCE SHARE
there are two types of capital reduction
i equal ; when reduction relates to ordinary share only and apply to each holder of ordinary shares in proportion to the number of ordinary shares held and as the name suggest the term of the reduction are the same for each member it is made by ordinary resolution
ii selective : when the above condition nt full filled or aapplied then selective occurs it make by voting by special resolution or resolution agreed byb all the ordinary share holder
the must notify ASIC of the reduction in share capital before conducting any meeting
SHARE BUY BACK
When a company acquires share in itself from its existing shareholder and then cancelled those shares
to know more read sec 275A
1 equal share buy back here ordinary sh holder offers a reasonable opportunity offer buy back at same % of their ordinary share
2selective buy back here only selective members of the company gets the offer
3 employee share scheme buy back this happen when a company buy back share that is held by or for its employees or salaried director
4 on market buy back here the company buy back by trading on stock exchange
5 minimum holding buy back when the company buy back unmarketable parcels of shares from share holders
it too notify to ASIC
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