Satyawan Ltd. is a public limited company, listed in Bombay Stock Exchange. The Board of directors are planning to buy back of shares. You being the CFO, calculate the maximum number of shares that can be bought back alo

(i) According to 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 the standalone or consolidated financial statements of the company, whichever sets out a lower amount. In the given situation, the maximum buy back limit will be: Equity Share Capital = ₹ 30,00,000 12% Preference Share Capital = ₹ 25,00,000 General Reserve = ₹ 10,00,000 Profit & Loss Account = ₹ 25,00,000 Securities Premium = ₹ 15,00,000 Total = ₹ 105,00,000 Maximum amount of buy back by Satyawan Ltd. through special resolution: ₹ 105,00,000 * 25% = ₹ 26,25,000 (ii) Desired Debt Equity Ratio after Buyback shall be 2:1 Debt (given) (20,00,000) = ₹ 20,00,000 Equity to be maintained after Buyback = ₹ 20,00,000 ÷ 2 = ₹ 10,00,000 Existing Equity (Share Capital + Free Reserves) (₹ 30,00,000 + ₹ 25,00,000 + ₹ 10,00,000 + ₹ 25,00,000 + ₹ 15,00,000) = ₹ 105,00,000 Therefore, Permissible Dilution in Equity = ₹ 105,00,000 - ₹ 10,00,000 = ₹ 95,00,000 Therefore, Maximum Permissible Buyback = Least of the above as calculated i.e. ₹ 26,25,000. Further, 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 share capital of the company in that financial year. Accordingly, Maximum number of equity shares that can be bought back: = (₹ 30,00,000 / ₹ 10 face value) * 25% = 75,000 shares Maximum price that can be paid per equity share bought back: = ₹ 26,25,000 / 75,000 shares = ₹ 35 per equity share.