Page 91 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes (c) from odd lots, that is to say, where the lot of securities of a public company, whose shares
are listed on a recognised stock exchange, is smaller than such marketable lot, as may be
specified by the stock exchange
(d) by purchasing the securities issued to employees of the company pursuant to scheme of
stock option or sweat equity.

Self Assessment

Fill in the blanks:

1. ........................ of securities simply implies purchase of its own shares by the Company.
2. ........................ means any security which has the character of more than one type of securities,
including their derivatives.

3. The buy-back of the shares or other specified securities, if listed on a stock exchange, shall
be carried out in accordance with the Regulations framed by the .................................
True or False:

4. The quantum of buy back could be upto 25% of paid up capital.
5. The Company shall make no offer of buy-back within a period of 365 days reckoned from
the date of the preceding offer of buy-back.

4.3 Circumstances where Buy Back is not allowed

No Company shall directly or indirectly purchase its own shares:
(Section 77 B)

 Through any subsidiary Company or its own subsidiaries if any;
 Through any investment Company or companies;
 If the Company commits a default in the repayment of deposit or payment of interest,
redemption of debentures or preference shares or payment of dividend to any shareholder
or repayment of term loans or payment of interest to any financial institution which is
subsisting;

The idea seems to be to stop accumulation of its shares by indirect means.
 Where a Company has not complied with the provisions of sections:
 159 regarding Annual Return

 207 regarding failure to pay dividend within 30 days of declaration; and
 211 regarding disclosure of true and fair view in the Balance Sheet. Section 211(3A)
requires that every company’s profit & Loss account and balance sheet shall comply
with the accounting standards.
There should be no subsisting default by the Company in payment of:
1. any deposit or interest due thereon
2. redemption of debentures or preference shares

3. payment of dividend
4. any term loan or interest thereon to any financial institution or bank.

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