Section 70: Prohibition for buy-back in certain circumstances
This section prohibits companies from buying back their own shares in certain circumstances, such as when they have unpaid debts or have not filed required reports.
The section, clause by clause
What the section says
In plain terms
(1)No company shall directly or indirectly purchase its own shares or other specified securities—
A company cannot buy its own shares or other specified securities if it has unpaid debts to shareholders, banks, or other financial institutions, unless the debt is paid and 3 years have passed since the debt was paid.
(1)(a)through any subsidiary company including its own subsidiary companies;
(1)(b)through any investment company or group of investment companies; or
(1)(c)if a default, is made by the company, in the repayment of deposits accepted either before or after the commencement of this Act, interest payment thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or re payment of any term loan or interest payable thereon to any financial institution or banking company:
provisoProvided that the buy-back is not prohibited, if the default is remedied and a period of three years has lapsed after such default ceased to subsist.
(2)No company shall, directly or indirectly, purchase its own shares or other specified securities in case such company has not complied with the provisions of sections 92, 123,127 and section 129.
A company cannot buy its own shares or other specified securities if it has not filed required reports and documents, such as annual returns and financial statements.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
This section refers to
Referred to by
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.