CkBooks Online – Free Online Books

Repurchase of Shares – Section 95 A

Following are the requirements and condition of repurchase of shares:

• Special resolution, indicating the maximum number of shares to be repurchased and the maximum price to be offered.
• The purchase shall be in cash and out of the distributable profits.
• In case of purchase at premium the amount of premium shall be charged to share premium account, in the absence of share premium the difference would be charged to distributable profits.
• If shares are purchased at a discount the discount will be credited to “Capital Repurchase Reserve Account”.
• The shares purchased shall be cancelled forthwith.
• The amount of paid up capital account would be reduced by the nominal amount of the shares repurchased.

• An amount equal to the nominal value of the shares repurchased will be transferred from distributable profits of the company and credited to “Capital Repurchase Reserve Account”
• Capital Repurchase Account is considered as if it was the paid up share capital of the company except that the reserve account may be applied by the company to issue fully paid up bonus shares to the members of the company

There are two ways through which a company can reduce its paid up share capital:

• Repurchase of shares Section 95 A
• Reduction in share capital Section 96

Reduction in Share Capital – Section 96
• Following are the requirements and condition of reduction in share capital:

• Special resolution and approval of court,

The company may:

• Extinguish or reduce liability on any shares in respect of unpaid share capital Cancel any paid up share capital that is lost or not presented by any assets
• Pay off any share capital that is in excess of its needs

Disclosure Requirements of Share Capital
• Share capital classified under the following sub-heads, namely:

• Issued, subscribed and paid up capital, distinguishing in respect of each class between:
• Shares allotted for consideration paid in cash;
• Shares allotted for consideration other than cash, showing separately shares issued against property and others (to be specified); and
• Shares allotted as bonus shares.

• If the share capital is divided into different classes of shares, namely ordinary, preference etc.

For each separate class of share capital, the following is disclosed:

a) Authorized Capital

• Number of Shares
• Nominal value

b) Paid up Capital

• Number of Shares
• Nominal value

c) Reconciliation of number of shares outstanding at beginning and end of the year.
d) The rights, preferences and restrictions attaching to each class of share capital including restrictions on the distribution of dividends and the repayment of capital.
e) Shares in the Company held by the Company itself or by subsidiaries or associates of the Company.
f) Shares reserved for issuance under options and sales contracts, including the terms and amounts.