The following information is available from the audited balance sheet of SZ Ltd. (₹ in lakh) Equity Share capital (3,000 lakh share of ₹10 each) 30,000 Share Premium A/c 3,000 General Reserve 10,000 Secured Loans 40,000

To compute the maximum limit for buy-back, we need to consider the provisions of both the Companies Act, 2013 (Section 68) and SEBI (Buy-Back of Securities) Regulations, 2018 (Regulation 4). Information Provided: Equity Share Capital = ₹30,000 lakh (3,000 lakh shares of ₹10 each) Share Premium A/c = ₹3,000 lakh General Reserve = ₹10,000 lakh Secured Loans = ₹40,000 lakh Unsecured Loans = ₹22,000 lakh Free Reserves = Share Premium A/c + General Reserve = ₹3,000 lakh + ₹10,000 lakh = ₹13,000 lakh Total Debt = Secured Loans + Unsecured Loans = ₹40,000 lakh + ₹22,000 lakh = ₹62,000 lakh Conditions for Buy-back: 1. Maximum Limit based on Paid-up Capital and Free Reserves (25% Rule): As per Section 68 of the Companies Act, 2013, and Regulation 4 of 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. Aggregate of Paid-up Capital and Free Reserves = ₹30,000 lakh + ₹13,000 lakh = ₹43,000 lakh Maximum Buy-back Limit (25% of Capital + Reserves) = 25% of ₹43,000 lakh = ₹10,750 lakh 2. Maximum Limit based on Number of Equity Shares (25% Rule): The number of equity shares bought back in any financial year shall not exceed 25% of the total paid-up equity share capital. Total Paid-up Equity Share Capital = ₹30,000 lakh Maximum Buy-back Limit (25% of Equity Share Capital) = 25% of ₹30,000 lakh = ₹7,500 lakh 3. Debt-Equity Ratio (2:1 Rule): As per Section 68 of the Companies Act, 2013, the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back is not more than twice the paid-up capital and its free reserves. Let 'x' be the amount of buy-back. If buy-back is done out of free reserves and securities premium, an amount equal to the nominal value of shares bought back must be transferred to the Capital Redemption Reserve (CRR). This effectively reduces free reserves. So, after buy-back, Free Reserves = (₹13,000 lakh - x) Paid-up Capital and Free Reserves after buy-back = ₹30,000 lakh + (₹13,000 lakh - x) = ₹43,000 lakh - x Debt-Equity Ratio: Total Debt / (Paid-up Capital + Free Reserves after buy-back) ≤ 2 ₹62,000 lakh / (₹43,000 lakh - x) ≤ 2 ₹62,000 lakh ≤ 2 × (₹43,000 lakh - x) ₹62,000 lakh ≤ ₹86,000 lakh - 2x 2x ≤ ₹86,000 lakh - ₹62,000 lakh 2x ≤ ₹24,000 lakh x ≤ ₹12,000 lakh Conclusion: Comparing the limits derived from all three conditions: From Condition 1: ₹10,750 lakh From Condition 2: ₹7,500 lakh From Condition 3: ₹12,000 lakh The company can buy back shares up to the lowest of these limits. Therefore, the maximum limit up to which buy-back is permitted in the financial year 2022-2023 is ₹7,500 lakh .