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A company proposes a buy-back of shares within the limit that the board itself may authorise under the proviso to section 68(2)(b) of the Companies Act, 2013. How must it be authorised?

Question and options

A company proposes a buy-back of shares within the limit that the board itself may authorise under the proviso to section 68(2)(b) of the Companies Act, 2013. How must it be authorised?

  1. By a special resolution of the members

  2. By a board resolution passed at a meeting

  3. By a resolution of the audit committee

  4. By a board resolution passed by circulation

Answer and explanation

Correct answer: B - By a board resolution passed at a meeting

The proviso to section 68(2)(b) of the Companies Act, 2013 lets the board authorise a buy-back of up to 10% of the total paid-up equity capital and free reserves by a resolution passed at its meeting, and section 179(3)(b) lists buy-back among the powers exercisable only at board meetings, so circulation will not do. A special resolution of the members is needed only for a larger buy-back, up to 25%.

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