Hardnut Ltd. wants to buy-back its equity shares. The company has equity share capital of ₹100 crore (face value of ₹10 fully paid-up) and free reserves of ₹200 crore. Partly paid equity shares are ₹60 crore. Preference

The Companies Act, 2013, provides for two main methods of buy-back approval: Board Approval: The Board of Directors can approve buy-back up to 10% of the total paid-up equity capital and free reserves of the company. Shareholder Approval (Special Resolution): Shareholders can approve buy-back up to 25% of the total paid-up equity capital and free reserves of the company. For any financial year, the shareholders can approve by special resolution up to 25% of total equity capital in that year. Important Note: Only fully paid-up shares can be bought back. Partly paid shares are not eligible for buy-back. Let's calculate the quantum of shares that can be bought back by Hardnut Ltd.: Given Data: Equity Share Capital (fully paid-up) = ₹100 crore Free Reserves = ₹200 crore Partly paid Equity Shares = ₹60 crore ( Not eligible for buy-back ) Preference Share Capital (fully paid-up) = ₹40 crore ( Not considered for buy-back limits of equity shares ) Calculations for Buy-back: 1. Quantum of buy-back with Board Approval (up to 10% of Paid-up Equity Capital + Free Reserves): Total Paid-up Equity Capital and Free Reserves = ₹100 crore + ₹200 crore = ₹300 crore Maximum buy-back limit = 10% of ₹300 crore = ₹30 crore 2. Quantum of buy-back with Shareholder Approval (Special Resolution): Limit 1: Up to 25% of Paid-up Equity Capital + Free Reserves Total Paid-up Equity Capital and Free Reserves = ₹100 crore + ₹200 crore = ₹300 crore Maximum buy-back limit = 25% of ₹300 crore = ₹75 crore Limit 2: Up to 25% of Paid-up Equity Capital in a financial year Paid-up Equity Capital = ₹100 crore Maximum buy-back limit = 25% of ₹100 crore = ₹25 crore The company must adhere to the lower of the two limits under shareholder approval. Therefore, with shareholder approval, the maximum buy-back amount would be ₹25 crore (being the lower of ₹75 crore and ₹25 crore). Conclusion: If Hardnut Ltd. proceeds with Board approval , it can buy back shares worth up to ₹30 crore . If Hardnut Ltd. proceeds with Shareholder approval (Special Resolution) , it can buy back shares worth up to ₹25 crore . The company should choose the appropriate approval route based on the desired quantum of buy-back, ensuring all other conditions for buy-back are also met.