The Board of Directors of PQR Limited has proposed a buyback of its shares. The paid up capital of the company as on 31st March 2019 was ₹10 crores. The free reserves of the company on the same date were also ₹10 crores.

The provisions of section 68 of the Companies Act, 2013 provide that 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. Particulars Amount Paid up Capital of the Company ₹10 Crore Free Reserves of the Company ₹10 Crore 10% of the Paid up capital and free reserves 10% of (₹10 + ₹10) = ₹2 Crore Hence, according to the provisions of Companies Act, 2013 the board can approve buyback of shares to the extent of ₹2 Crore. 15% of the Paid up Capital = 15% of ₹10 Crore = ₹1.5 Crore. Thus, Board of Directors is authorized to approve buy back up to ₹2 crore. Hence the decision of the Board to purchase shares for a value up to 15% of the paid up share capital is valid.