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    Query on Buy Back under section 68 of Companies Act, 2013

    Posted By : Ekta / Published on : 27-Jul-2019 05:22 AM / View : 806 / Comment : 1

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    Dear Friends,

    In case of buy-back of a private limited company, is it mandatory to attach the valuation certificate along with SH-8/ 9?

    Secondly, where there are foreign shareholders taking part in the buy-back do we have to file form FC-TRS with RBI
    Read more on : companies section under back query

    • Yes, as per the Companies Act, 2013 and the Buyback Regulations, it is mandatory for a company to attach the valuation certificate along with the SH-8 or SH-9 form while filing for the approval of a buyback. The valuation certificate must be obtained from a registered valuer, who is an independent professional with expertise in valuation.

      The valuation certificate must contain a detailed analysis of the assets and liabilities of the company, the market value of the shares proposed to be bought back, and the fair price at which the buyback is being offered. The certificate must also include the method used for valuation and the assumptions made in arriving at the valuation.

      The purpose of attaching the valuation certificate is to ensure that the buyback price offered by the company is fair and not prejudicial to the interests of the shareholders. The certificate helps in providing a transparent and objective basis for determining the buyback price, and helps in preventing any misappropriation of funds by the company or its management.

      Therefore, it is mandatory for a company to attach the valuation certificate along with the SH-8 or SH-9 form while filing for the approval of a buyback.

       

      Further, Yes, 

      if there are foreign shareholders taking part in the buyback, the company would need to file Form FC-TRS with the Reserve Bank of India (RBI) within 60 days of the receipt of funds in the prescribed format. Form FC-TRS stands for "Foreign Collaboration - Transfer of Shares". It is a mandatory form that needs to be filed with the RBI for any transfer of shares or securities by a person resident in India to a person resident outside India or vice versa.

      In case of a buyback, the company needs to report the receipt of funds from the foreign shareholders through Form FC-TRS to the RBI. The form should contain details such as the name of the foreign shareholder, the amount of investment, and the mode of payment. The company also needs to provide a copy of the buyback contract to the RBI.

      Non-compliance with the FC-TRS guidelines can result in penalties and fines from the RBI. Therefore, it is important for companies to ensure that they comply with the guidelines and file the necessary forms in a timely manner.

      31-03-2023 / 10:51:39 AM
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