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Case Study on Services rendered in case of Buy Back of Shares

February 27, 2020

About the client:

R&A Associates has advised and assisted the client for buy-back of shares. The client is primarily engaged in the business of industrial packaging and manufacture of strap, stretch, protective packaging, packaging tools and equipment that are used to apply in bulk packaging materials.

Our Association and work- We have been associated with the client for over 15 years. The process of buy-back of shares was followed with due compliance of Section 68, 69 & 70 of Companies Act, 2013.  In the present case, the company had Foreign Direct Investments (FDI) from overseas shareholders and so the process of buy back involved compliance with Foreign Exchange Management Act, 1999 also read with relevant regulations (FEMA).  The entire process of buy back involves series of activities which takes around two to three months for completion and the same is enumerated below:

  1. Review of the audited/unaudited Financial Statements of the company to primarily check the eligibility to buy back its shares and the quantum of shares that can be buy-backed.
  2. Preparation of detailed step-by-step action plan mapped with the timelines for completion of each activity along with the checklist of information required.
  3. Holding of Board & General Meeting to seek approval of Board & Members respectively for buy-back of shares.
  4. Advising on the requirement of opening separate bank account for the purpose of buy back and transfer of funds equal to the nominal value of shares so purchased to capital redemption reserve account.
  5. Preparing the necessary applications, documents, affidavits, declarations from directors that shall be necessary for filing with the Registrar of Companies.
  6. Preparation and filing of Form FCTRS with Foreign Investment in India– Reporting in Single Master Form on FIRMS Portal (FEMA compliance) after creation of login credentials. Liaising with the authorized dealer and Reserve Bank of India officials for approval of form.
  7. Preparation, filing, certifying of various e-forms as required and liaising with the concerned Registrar of Companies for approval of forms.
  8. Advising on the mode of payment of money to the shareholders and the process to extinguish and physically destroy the shares and securities which have been brought back.

Our deep understanding of the provisions, extensive experience of documentation and coordination with the regulator ensured that the entire process was completed smoothly within the stipulated timelines.

R&A Associates has also assisted other clients in various sectors be it Information Technology Enabled Services (ITeS), Non-banking financial institutions etc., for similar work.

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