India:
Calculations Based On Un-Audited Accounts Permitted For Buy Back
20 March 2016
Agram Legal Consultants
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The MCA amended the Companies (Share Capital and Debentures)
Rules, 2014 ("Share Capital Rules") in relation to
buy-back calculation for private companies and unlisted public
companies, by issuing a notification on March 10, 2016
("MCA Notification"). As per the
provisions of the Share Capital Rules, auditors of such a company,
proposing to buy- back its securities, are required to submit a
report to its board of directors, inter alia stating that the
audited accounts on the basis of which the calculation for the
buy-back was done, is not more than 6 (six) months old from the
date of the offer document. The MCA Notification makes an exception
in the event that the audited accounts are more than 6 (six) months
old, allowing the calculation for the buy-back to be done on the
basis of un-audited accounts not older than 6 (six) months, from
the date of the offer document, which are subjected to limited
review by the auditors of the company.
The MCA Notification will
allow companies to proceed
with buy-back of their
securities based on the
most recent un-audited
accounts, if the audited
accounts are more than
6 (six) months old.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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