Startup Services · Buy-Back

Buy Back of Shares return surplus capital to shareholders, compliantly.

A share buy-back lets a company repurchase its own shares from existing shareholders, returning surplus cash and improving key financial ratios — subject to the strict financial limits and procedural conditions of Section 68 of the Companies Act.

A buy-back of shares is a corporate action in which a company purchases its own shares from existing shareholders, out of its free reserves, securities premium account, or the proceeds of a fresh issue of shares. Companies typically undertake a buy-back to return surplus cash to shareholders, improve earnings per share, or consolidate ownership, without the complexity and time involved in reducing share capital through the National Company Law Tribunal.

Section 68 of the Companies Act 2013 permits a buy-back subject to significant conditions — the buy-back cannot exceed 25% of the total paid-up capital and free reserves in a financial year (10% if approved only by the board), the debt-equity ratio post buy-back cannot exceed 2:1, all shares must be fully paid-up, and the company must not undertake another buy-back within one year of completing the last one.

At Beyonte Compliances, we assist companies with assessing eligibility, computing the permissible buy-back limits, preparing the declaration of solvency and offer letter, and completing the ROC filings and extinguishment of shares following the buy-back.

What Our Buy-Back Service Covers

Eligibility & Limit Computation

Computing the maximum permissible buy-back size based on paid-up capital, free reserves, and the resulting debt-equity ratio.

Board & Shareholder Approval

Preparing the board resolution for buy-backs up to 10%, or the special resolution required for larger buy-backs.

Declaration of Solvency

Preparing and filing the declaration of solvency in Form SH-9, verified by an affidavit from the directors.

Offer Letter Preparation

Drafting the letter of offer to shareholders in Form SH-8, disclosing the buy-back terms and timelines.

Buy-Back Execution

Managing the offer period and the actual purchase of shares tendered by shareholders under the buy-back.

Extinguishment of Shares

Coordinating physical or dematerialised extinguishment and destruction of the bought-back shares within the prescribed timeline.

Return of Buy-Back Filing

Filing Form SH-11 with the Registrar of Companies reporting completion of the buy-back.

Compliance Certificate

Coordinating the compliance certificate from the company secretary or auditor confirming adherence to Section 68.

Our Process

Eligibility Assessment

Verifying the company meets the financial and procedural conditions for a buy-back under Section 68.

Approval

Passing a board resolution (up to 10% limit) or special resolution (up to 25% limit) authorising the buy-back.

Solvency Declaration

Filing the declaration of solvency in Form SH-9 before making the offer to shareholders.

Offer & Purchase

Issuing the letter of offer in Form SH-8 and completing purchase of shares tendered by shareholders.

Extinguishment & Filing

Extinguishing the bought-back shares and filing Form SH-11 to report completion of the buy-back.

Why It Matters

✓Returns surplus cash to shareholders without a full capital reduction process

✓Improves earnings per share and other key financial ratios

✓Faster and less procedurally complex than an NCLT-approved capital reduction

✓Correct limit computation avoids breaching the statutory 25% or 10% ceiling

✓Declaration of solvency protects directors by formalising the solvency assessment

✓Timely extinguishment of shares avoids penalty for delayed compliance

✓Correct SH-11 filing closes out the buy-back cleanly with the ROC

✓Structured process reduces the risk of shareholder disputes during the buy-back

Frequently Asked Questions

A buy-back approved only by the board cannot exceed 10% of the total paid-up equity capital and free reserves. A buy-back exceeding 10%, up to a maximum of 25%, requires approval by special resolution of shareholders.

No. Section 68 prohibits a company from making another buy-back within a period of one year from the date of completion of the preceding buy-back.

Yes, before making the offer to shareholders, the company must file a declaration of solvency in Form SH-9 with the Registrar of Companies, verified by an affidavit signed by at least two directors, one of whom must be the managing director if the company has one.

Shares purchased under a buy-back must be physically or electronically extinguished and destroyed within seven days of completion of the buy-back, and cannot be reissued or held as treasury shares.

Return surplus capital to shareholders through a compliant buy-back.

Talk to our team about eligibility, limits, and execution of your share buy-back.