M s ABC Pvt Ltd is a Private Limited Company desires to give to Mr Shyam a loan of Rs 5 Crore for pu...........

Companies Act-Phase (I & II) Share capital and debentures

M/s ABC Pvt. Ltd., is a Private Limited Company desires to give to Mr. Shyam a loan of Rs. 5 Crore for purchase of its own shares. Whether Company can do so?

Yes

Partly Yes

Partly No

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Explanation:

Prohibitions on Buy-Back:-

No company shall directly or indirectly purchase its own shares:-through any subsidiary company including its own subsidiary companies;
through any investment company or group of investment companies; or if a default, is made by the company, in the repayment of deposits accepted either before or after the commencement of this Act, interest payment thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or repayment of any term loan or interest payable thereon to any financial institution or banking company, however, the buy-back is not prohibited, if the default is remedied and a period of three years has lapsed after such default ceased to subsist.

The Company shall not buy-back its shares If the company has not complied with the provisions of 92 (Annual Return), 123 (Declaration of Dividend), 127 (punishment for failure to distribute dividend) and section 129 (Financial Statement)