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Homework answers / question archive / In a share buyback, a company decides to buyback 30% of the issued capital at a price that would be within 25% of the share capital and free reserves of the company

In a share buyback, a company decides to buyback 30% of the issued capital at a price that would be within 25% of the share capital and free reserves of the company

Accounting

In a share buyback, a company decides to buyback 30% of the issued capital at a price that would be within 25% of the share capital and free reserves of the company. The board and shareholders have approved the proposal. However, since the company proposes to buy more than the allowable 25% of issued capital, the Company Secretary decides to approach SEBI for a special permission in this case. The CFO is of the view that since the company is within the permissible value of the buyback, no approval is required from any authority. Resolve the issue from the following alternatives:

(a) The Company Secretary is right

(b) The CFO is right

(c) The Company Secretary is right but SEBI is not the authority to approach

(d) Both are wrong since there is no approval mechanism.

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