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The power of a company to purchase its own shares under the Companies Act, 2013 is subject to which one…

The general debt condition for a buy-back is that the company's secured and unsecured debts after the purchase must not exceed twice its paid-up capital and free reserves.…

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The power of a company to purchase its own shares under the Companies Act, 2013 is subject to which one of the following conditions ?

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Answer and explanation

Correct answer D

The general debt condition for a buy-back is that the company's secured and unsecured debts after the purchase must not exceed twice its paid-up capital and free reserves. Section 68 ordinarily limits the buy-back itself to 25 percent of paid-up capital and free reserves, subject to the separate equity-share calculation. The Central Government can notify a higher debt ratio for specified classes of companies.

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