## Buy-Back of Shares or Specified Securities – Section 68 (Introduction)

### What can be bought back?

A company may purchase its own:

Shares;
ESOP-issued shares; or
Any other security notified by the Central Government.

### Methods of Buy-Back

Buy-back may be undertaken from:

1. Existing security holders on a proportionate basis; or

2. (Other methods continue in subsequent provisions of Section 68 — to be covered in detail next.)

> Buy-back is governed by Section 68 (and is not treated as a reduction of capital under Section 66).

Worked example

### Example 1

Example: U Ltd. proposes to buy back 10% of its equity shares. It plans to make the offer to all existing equity holders pro-rata to their holdings. Is this a permitted method?

Solution: Yes. Buying back from existing security holders on a proportionate basis is one of the express methods permitted under Section 68.

⚠️ Common exam mistakes

Confusing Section 68 (buy-back) with Section 66 (reduction of capital) — they are governed by separate procedural codes.
Assuming any security can be bought back — only shares, ESOP shares and CG-notified securities are eligible.

Bare-Act text Section 68 · Companies Act, 2013 · click to expand

Section 68(1): Notwithstanding anything contained in this Act, but subject to the provisions of sub-section (2), a company may purchase its own shares or other specified securities (hereinafter referred to as buy-back) out of— (a) its free reserves; (b) the securities premium account; or (c) the proceeds of the issue of any shares or other specified securities.

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Buy-Back of Shares – Introduction & Methods [Section 68]

Worked example

⚠️ Common exam mistakes