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    Question

    Which of the following statement related to Buy back of

    shares is incorrect?
    A Buy back up-to 10% of the total paid up capital and free reserves of the company can be made simply by the Board of Directors Resolution Correct Answer Incorrect Answer
    B Buy back can be made up to 25% of the total paid up capital and free reserves by value and 25% of equity by volume Correct Answer Incorrect Answer
    C The ratio of the aggregate secured and unsecured debts owed by the company after the buy back should not be more than twice the paid up capital and free reserves Correct Answer Incorrect Answer
    D Buy back of equity shares is allowed out of fresh issue of equity shares of that class Correct Answer Incorrect Answer
    E All are correct Correct Answer Incorrect Answer

    Solution

    A company may purchase its own shares or other specified securities out of: o Its Free Reserves o The Securities Premium Account, or o The proceeds of any shares or any other securities § No buy back shall be made out of the proceeds of an earlier issue of the same kind of shares or other specified securities · Proceeds of Earlier Issue - Points of Consideration o Buy back of equity shares is not allowed out of fresh issue of equity shares o However, Buy back is allowed out of an earlier issue of securities other than the equity shares such as preference shares, debentures, etc. for the purpose of redemption. Snapshot from study notes of the ixamBee SEBI course covering topic in detail

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