Inspiration Limited is a listed company which is sitting on a pile of huge cash flows. With an understanding of the current times, the directors of the company are intending to buyback ₹100 lakh shares (of the total paid

Inspiration Limited has to ensure that the company is authorized for buyback of shares by its Articles of Association. In the present case, the buyback is 20% of the paid up capital and so it requires a special resolution. As per section 68(2) of the Companies Act, 2013, if the amount of buyback was up to 10% of paid up capital and free reserves, then the board resolution would have been sufficient. If Directors have decided to hold the board meeting next week to approve the buy back and implement the buyback process, they are wrong as they will need to call a meeting of shareholders. So, Special Resolution is to be passed, Notice for the same has to be given to Shareholders at least 21 days before the date on which passing Special Resolution. Along with Notice an explanatory statement needs to be provided explaining the purpose of Buyback. E-Form MGT-14 should be filed with the Registrar along with fee within 30 days of passing the Special Resolution. As per Section 68 of the Companies Act 2013 read with Rule 17(2) of the Companies (Share Capital and Debentures) Rules, 2014-The company which has been authorized by a special resolution shall, before the buy-back of shares, file with the Registrar of Companies a letter of offer in Form No. SH.8, along with the fee: Provided that such letter of offer shall be dated and signed on behalf of the Board of directors of the company by not less than two directors of the company, one of whom shall be the managing director, where there is one. Where a company proposes to buy-back its own shares or other specified securities under section 68 in pursuance of a special resolution, it shall, before making such buy-back, file with the Registrar and the Securities and Exchange Board, a declaration of solvency signed by at least two Directors of the company, one of whom shall be the managing director, if any, in Form SH-9 and verified by an affidavit to the effect that the Board of Directors of the company has made a full inquiry into the affairs of the company as a result of which they have formed an opinion that it is capable of meeting its liabilities and will not be rendered insolvent within a period of one year from the date of declaration adopted by the Board. The letter of offer shall be dispatched to the shareholders or security holders immediately after filing the same with the Registrar of Companies but not later than twenty days from its filing with the Registrar of Companies. The offer for buy-back shall remain open for a period of not less than fifteen days and not exceeding thirty days from the date of dispatch of the letter of offer. However, where all members of a company agree, the offer for buy-back may remain open for a period less than fifteen days. The company shall immediately after the date of closure of the offer, open a separate bank account and deposit therein, such sum, as would make up the entire sum due and payable as consideration for the shares tendered for buy-back in terms of these rules. Every buy-back shall be completed within a period of one year from the date of passing of the special resolution, or as the case may be, the resolution passed by the Board. The company, shall maintain a register of shares or other securities which have been bought-back in Form No. SH. 10. Company should after the completion of the buy-back file with the Registrar and the Securities and Exchange Board (in case of listed companies) a return Form No. SH.11 along with the 'fee' containing such particulars relating to the buy-back within thirty days of such completion, as may be prescribed. There shall be annexed to the return filed with the Registrar in Form No. SH-11, a certificate in Form No. SH-15 signed by two directors of the company including the managing director, if any, certifying that the buy-back of securities has been made in compliance with the provisions of the Act and rules made thereunder.