RESTRICTIONS
ON PURCHASE BY COMPANY OR GIVING OF LOANS BY IT FOR PURCHASE OF ITS SHARES.
(1) No company limited by shares or by
guarantee and having a share capital shall have power to buy its own shares
unless the consequent reduction of share capital is effected under the
provisions of this Act.
(2) No public company shall give, whether by means
of a loan, guarantee, the provision of security or otherwise, any financial
assistance for the purpose of any shares in the company or in its holding
company.
(3) Nothing in sub-section (2) shall
apply to—
|
(a) the lending of money by a
banking company in the ordinary course of its business;
|
|
(b) the provision by a company of
money in accordance with any scheme approved by company through special
resolution and in accordance with such requirements as may be
prescribed,
for the purchase of, or subscription for, fully paid-up shares in the company
or its holding company, if the purchase of, or the subscription for, the
shares held by trustees for the benefit of the employees or such shares held
by the employee of the company;
|
|
(c) the giving of loans by a company
to persons in the employment of the company other than its directors or key
managerial personnel, for an amount not exceeding their salary or wages for a
period of six months with a view to enabling them to purchase or subscribe
for fully paid-up shares in the company or its holding company to be held by
them by way of beneficial ownership:
|
COMMENT: disclosures in respect of voting
rights not exercised directly by the employees in respect of shares to which
the scheme relates shall be made in the Board's report in such manner as
may be prescribed.
(4) No right of a company to redeem
any preference shares issued by it under this Act or under any previous company
law is affected under this.
(5) If a
company contravenes the provisions of this section,
Company:
1,00,000<fine<25,00,000 rupees
Officer: 3 years<imprisonment
1,00,000<fine<25,00,000
rupees
DISCLAIMER: THE
ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING
AT THE TIME OF THE PREPARATION. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT
AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING
INITIATIVE.
THE AUTHOR – CS DEEPAK
SETH (ASSOCIATE PARTNER HELPINGHANDS PROFESSIONALS LLP) AND CAN BE REACHED AT CONTACTHHPRO@GMAIL.COM
OR 9910248911.
0 Comments