ABC Ltd. wanted to buy back its shares and provided the following information as on 31st March, 2026: 60,000 equity shares of ₹100 each: General Reserve - ₹36,00,000: P & L (Cr) ₹40,00,000; Security Premium ₹4,00,000

Based on Section 68 of the Companies Act, 2013, the maximum quantum of buy-back is 15,000 shares (25% of total shares of 60,000) amounting to a maximum cost of ₹37,50,000 (25% of aggregate of paid-up capital + free reserves). The debt-equity ratio after buy back remains well within the 2:1 limit. Calculation of Maximum Quantum: Total Shares: 60,000 Equity Shares Maximum Shares (25% rule): 60000 * 25% = 15000; Offer Price: ₹250 Maximum Amount (Shares): 15000 * 250 = ₹37.50 Lakh Financial Capability (25% of aggregate of Paid-up Capital + Free Reserves) Equity Share Capital: ₹60,00,000 (60000 * 100) Add: General Reserve: ₹36,00,000 Add: P&L (Cr): ₹40,00,000 Add: Security Premium: ₹4,00,000 Total Net Worth: ₹1,40,00,000 Max Buy-back Value Allowed: 25% of 1,40,00,000 = ₹35 Lakh; Conclusion The maximum amount allowed by the 25% net worth criteria (₹35,00,000) is lower than the amount required for 25% of the shares (₹37,50,000). Therefore, the number of shares must be limited based on the financial capacity: Maximum Number of Shares: 35 Lakh / ₹250 = 14000 shares; Maximum Amount of Buy-back: ₹35,00,000 Note: The debt-equity ratio Before buy-back: Secured Loan = ₹40,00,000 and Unsecured Loan = ₹20,00,000 Debt = ₹40,00,000 + ₹20,00,000 = ₹60,00,000 Net Worth = ₹1,40,00,000 Debt-Equity Ratio: 60,00,000/1,40,00,000 = 0.43:1 After buy-back: Net Worth = 1,40,00,000 - 35,00,000 = ₹1,05,00,000 Debt Equity Ratio (after Buy Back) = 60,00,000/1,05,00,000 = 0.57:1 Both are well within the statutory limit of 2:1.