Divine Dwellings Ltd. is a listed company and it wants to buy-back its equity shares. Under the provisions of SEBI (Buy-Back of Securities) Regulations, 2018, answer (with reasons) whether the company can proceed to buy-

According to the provisions of regulation 4(ii) of the SEBI (Buy-Back of Securities) Regulations, 2018, 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- a) be less than or equal to 2: 1, based on both standalone and consolidated financial statements of the company whichever sets out a lower amount. However, if a higher ratio of the debt to capital and free reserves for the company has been notified under the Companies Act, 2013, the same shall prevail; b) be less than or equal to 2:1, based on the standalone or consolidated financial statements of the company, whichever sets out a lower amount, after excluding financial statements of all subsidiaries that are non-banking financial companies and housing finance companies regulated by Reserve Bank of India or National Housing Bank, as the case may be. However, the buy-back of securities shall be permitted only if all such excluded subsidiaries have their ratio of aggregate of secured and unsecured debts to the paid-up capital and free reserves of not more than 6:1 on standalone basis. In the given case, the ratio of aggregate of its secured and unsecured debts to the paid-up capital and free reserves is expected to be 2.05:1 after buy-back, which is higher than the requirements prescribed under the SEBI (Buy-Back of Securities) Regulations, 2018. Hence, the company cannot proceed for buy-back.