share capital

Buy-back of shares: Will recent changes in the tax laws end the party?

Rationale for Buy-Back Provisions

A cardinal principle of company law, incorporated in Section 67 of the Companies Act, 2013 (“the Act”), prohibits the purchase by the Company of its own securities for the protection of creditors.  Section 68 is an exception to this general rule; hence, it starts with a non obstante clause laying down several conditions and restrictions for the companies undertaking a buy-back of its shares, primarily with a view to protect the creditors.Continue Reading Buy-back of shares: Will recent changes in the tax laws end the party?

MCA’s Notification on Section 67 of the Companies Act, 2013

Introduction

One aspect which English Company Law has always grappled with is the manner in which the capital of a company should be protected for the benefit of its creditors. Way back in 1887, in its celebrated decision in Trevor v Whitworth[1], the House of Lords held that the statutory restrictions on a company’s power to reduce its capital “is to prohibit every transaction between a company and a shareholder, by means of which the money already paid to the company in respect of his shares is returned to him”.Continue Reading MCA’s Notification on Section 67 of the Companies Act, 2013 – Is it an Exemption or an Inclusion under the Henry VIII Clause?