Glory Limited, a listed company with the National Stock Exchange of India, proposes to buy back its shares under the SEBI (Buy-back of Securities) Regulations, 2018. At the time of buy-back proposal, the company has a pa

Conditions for Buyback of Shares or Other Securities In terms of Regulation 4 of the SEBI (Buy-Back of Securities) Regulations, 2018, the maximum limit of any buy-back shall be 25% or less of the aggregate of paid-up capital and free reserves of the company, based on both standalone and consolidated financial statements of the Company, whichever sets out a lower amount. All shares or other specified securities for buy-back shall be fully paid-up. In respect of the number of equity shares bought back in any financial year, the maximum limit shall be 25% and be construed with respect to the total paid-up equity shares capital of the company in that financial year. Further, it is prescribed that the ratio of the aggregate of secured and unsecured debts owed by the company to the paid-up capital and free reserves after buy-back shall be less than or equal to 2:1, based on both standalone and consolidated financial statements of the company whichever is lower. Maximum Buyback Limit of Glory Limited Maximum buyback allowed = 25% of Paid-up Capital + Free Reserves Paid-up Capital = ₹ 30 crore Free Reserves = ₹ 60 crore Total = ₹ 90 crore Maximum buyback allowed = 25% × ₹ 90 crore = ₹ 22.50 crore However, Glory Limited proposed a buyback of ₹ 25 crore which exceeds the permissible limit of ₹ 22.50 crore. Therefore, the proposed buyback is not in compliance with the SEBI (Buy-Back of Securities) Regulations, 2018. The buy-back since not permissible, the limit with respect to Debt-Equity ratio is not required to be evaluated.