XYZ Ltd. is a company listed on the National Stock Exchange. The latest audited financial position of XYZ Ltd. is as under: (Amount in ₹ crore) Paid up equity capital 442, Free Reserves 20,347, Total secured and unsecure

Quantum of Buy-back (Section 68 of the Companies Act, 2013) (a) 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 buy-back has to be authorized by the board by means of a resolution passed at the meeting. (b) 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 instant case, since the paid-up equity capital and free reserves is ₹20,789 crore as per the latest audited financials, the Board can authorize through a resolution passed at its meeting the buy-back of shares totaling ₹1,955.57 crore, which is less than the prescribed 10% limit. After the buy-back scheme for ₹1955.57 crore has been fully completed, the company's reserves would drop to ₹18401.72 crore and its paid-up equity capital would drop by ₹10.29 crore to ₹431.71 crore. Hence, its paid up capital and free reserves after buy-back would drop to ₹18833.43 crore. Thus, the debt-equity ratio after buy-back scheme has been fully completed would be 0.068, which is less than the stipulated 2:1. Hence, XYZ Ltd. can proceed with the proposed buy-back scheme by passing a resolution passed at the Board meeting.