Page 93 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes 12. The Company shall complete the verification of the offers received from the shareholders
within 15 days from the date of closure of offer and the shares lodged shall be deemed to
be accepted unless shareholders are communicated otherwise within 21 days from the
closure of the offer.
13. In case of the number of shares offered by the shareholders is more than the total number
of shares to be brought back by the company, see that the acceptance per shareholder is
made on proportionate basis.
14. The Company should make arrangement to ensure that payment is made to the
shareholders within 7 days of the time specified in clause 12, supra, by opening a special
bank account, immediately after the closure of offer.
15. The share certificates should be extinguished and physically destroyed by the Company
within 7 days of acceptance of shares. And a certificate to this effect shall be filed with ROC
duly verified by two whole time directors including Managing Director, if any and a
Company Secretary in whole time Practice within 7 days of the extinguishment and
destruction of share certificates.

16. As soon as the buy-back is complete the Company shall file with the Registrar of Companies
within 30 days of such completion a return containing prescribed particulars called return
of buy-back.
17. The Company should maintain a Register of Shares Bought Back by the Company in the
prescribed form.

Self Assessment

Fill in the blanks:
6. The money borrowed from ............................... cannot be utilized for the buy back.
7. There must be a specific provision in the ............................... authorizing the Company to
buy back its own shares.
4.4 Escrow Account

Deposit in an escrow account, on or before the opening of the offer the following sum by way
of security for performances of obligations by the company under the Regulations:

(a) if the consideration payable does not exceed 100 crores; 25% of the consideration payable;
(b) if the consideration payable exceeds 100 crores; 25% on 100 crores and 10% thereafter.

Mode of Payment to Escrow Account

The escrow account can consist of either cash deposited with a scheduled commercial bank or
bank guarantee in favour of a merchant banker or deposit of acceptable securities with appropriate
margin with the merchant banker or a combination of the above.

Did u know? If the company has deposited the specified sum in an escrow account with a
scheduled commercial bank then while opening the account, empower the Merchant
banker to instruct the Bank to issue a Banker’s cheque or Demand Draft for the amount
lying to the credit of the escrow account.

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