Amended and updated notes on section 70 of Companies Act 2013. Detail discussion on provisions and rules related to prohibition for buy-back in certain circumstances.
Chapter IV (Sections 43–72) of the Companies Act, 2013 (CA 2013) deals with the provisions related to share capital and debentures. Section 70 of CA 2013 provides for prohibition for buy-back in certain circumstances.
Recently, we have discussed in detail section 69 (Transfer of certain sums to capital redemption reserve account) of CA 2013. Today, we learn the provisions of section 70 of Companies Act 2013.
Section 70 of the Companies Act, 2013 has been notified by the Ministry of Corporate Affairs (MCA) vide Notification No. S.O. 2754(E) issued dated 12.09.2013. This notification was come into force from 12th September, 2013 i.e. the commencement date of section 70 is 12-9-2013.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | IV |
| Chapter Name | Share Capital and Debentures |
| Section No. | 70 |
| Section Name | Prohibition for buy-back in certain circumstances |
| Monthly Updated Edition | Company Law PDF |
Section 70 of Companies Act 2013: Prohibition for buy-back in certain circumstances
Section 70 shall come into force on 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12.09.2013 except sub-section (2) which shall come into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27.03.2014.
(1) No company shall directly or indirectly purchase its own shares or other specified securities—
- (a) through any subsidiary company including its own subsidiary companies;
- (b) through any investment company or group of investment companies; or
- (c) if a default, is made by the company, in the repayment of deposits accepted either before or after the commencement of this Act, interest payment thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or repayment of any term loan or interest payable thereon to any financial institution or banking company:
Provided that the buy-back is not prohibited, if the default is remedied and a period of three years has lapsed after such default ceased to subsist.
(2) No company shall, directly or indirectly, purchase its own shares or other specified securities in case such company has not complied with the provisions of sections 92, 123, 127 and section 129.