PQR Ltd. is a company listed on the Bombay Stock Exchange. The latest audited financial position of PQR Ltd. is as under: Paid up equity capital ₹ 884 Free Reserves ₹ 40,694 Total secured and unsecured debts ₹ 2,550 The

Board of directors can approve buy-back up to 10% of the total paid-up equity capital and free reserves of the company and such buyback has to be authorized by the board by means of a resolution passed at the meeting. Shareholders by a special resolution can approve buy-back up to 25% of the total paid-up capital and free reserves of the company. In respect of any financial year, the shareholders can approve by special resolution up to 25% of total equity capital in that year. The ratio of the aggregate of secured and unsecured debts owed by the company after buy-back should not be more than twice the paid-up capital and its free reserves i.e., the ratio shall not exceed 2:1. In the present case, since the paid-up equity capital and free reserves is ₹ 41,578 crores as per the latest audited financial statement, the Board can authorise through a resolution passed at a meeting the buyback of shares totalling ₹ 3,911.15 crore, which is less than the prescribed 10% limit (i.e., ₹ 4157.80 crore). After the completion of the buyback scheme for ₹ 3,911.15 crore, the company's paid up capital and free reserve would drop to ₹ 37,666.85 crore (₹ 41578 crores minus ₹ 3911.15 crore) and total secured and unsecured debts is ₹ 2550 crore. Thus, the debt equity ratio is after by back scheme has been fully completed would be 0.068, which is less than the stipulated 2:1. Hence, PQR Limited can proceed with the proposed buy back scheme by passing a resolution passed at the meeting of its Board of Director.