No company limited by shares or by guarantee and having a share capital shall have power to buy its own shares unless the consequent reduction of share capital is effected under the provisions of this Act.
Only private limited companies (as opposed to public companies) can purchase their own shares out of capital, subject to any restriction or prohibition in the company’s articles.
A stock buyback, also known as a share repurchase, occurs when a company buys back its shares from the marketplace with its accumulated cash. A stock buyback is a way for a company to re-invest in itself. The repurchased shares are absorbed by the company, and the number of outstanding shares on the market is reduced.
Section 67(1) of the Companies Act, 2013 prohibits companies limited by shares or by guarantee and having a share capital, from buying its own shares, unless the consequent reduction of share capital is effected under the provisions of the Act.
Sec 77A – Power of company to purchase its own securities
(2) No company shall purchase its own shares or other specified securities under sub-section (1) unless : (a) the buy-back is authorized by its articles; (b) a special resolution has been passed in general meeting of the company authorizing the buy-back.
So, if you’re wondering, “can a private company buy back its own shares?”, the answer is yes!
There is no provision in the Companies Act that shares of a company could be held in the name of a public office. The collector of Central Excise, the secretary to the Government etc. is not a legal entity. Hence, shares cannot be held in the names of such public offices.