Company (Buy-Back of Securities) Rules, 1999
Notification G.S.R. 502(e) dated 6-07-1999 - In exercise of the powers conferred by
section 77A of Companies Act, 1956 (1 of 1956) read with sub-section (1) of section 642
of the said Act, the Central Government hereby makes the following rules, namely :-
1. Short title and commencement :- (1) These rules may be called the Private Limited
Company and Unlisted Public Limited Company (Buy-back of Securities) Rules, 1999.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. Applicability :- These rules shall be applicable to buy-back of equity shares or other
specified securities of a Private Limited Company and Unlisted Public Limited Company
not listed on any recognised stock exchange.
3. Buying-back :- A company may buy-back its shares by either of the following
from the existing shareholders on a proportionate basis through private offers;
by purchasing the securities issued to employees of the company pursuant to a
scheme of stock option or sweat equity.
4. Special resolution :- For the purposes of passing a special resolution under sub-
section (2) of section 77A of the Companies Act, 1956 (1 of 1956) the explanatory
statement to be annexed to the notice for the general meeting pursuant to Section 173 of
the said Act shall contain disclosures as specified in Schedule I.
5. Filing of letter of offer, etc. :- (1) The Company which has been authorised by a
special resolution shall, before the buy-back of shares, file with the Registrar of
Companies a draft letter of offer containing particulars specified in Schedule II.
(2) The Company shall file alongwith the letter of offer a declaration of solvency in Form
No. 4A, prescribed under the Companies (Central Government's ) General Rules and
Forms, 1956 and in accordance with provisions of sub-section (6) of section 77A of the
Companies Act, 1956.