# Buyback — Quantitative Limits & Disclosure Norms
## 1. Maximum Buyback Limit
| Parameter | Limit |
|---|---|
| Maximum buyback in any FY | 25% of (Paid-up Share Capital + Free Reserves) |
| Equity shares specifically (in a FY) | 25% of (Paid-up Equity SC + Free Reserves) |
## 2. Post-Buyback Debt-Equity Ratio
After buyback, the ratio of secured + unsecured debt to (paid-up capital + free reserves) shall NOT exceed:
```
Debt : Equity = 2 : 1
```
> Rationale: Buyback reduces equity. If debt is too high relative to remaining equity, creditors' interests are at risk.
## 3. Quality Requirement
- Such shares or securities being bought back must be fully paid-up.
- Buyback applies to both listed companies (SEBI Regulations apply) and unlisted companies (governed by Rules).
## 4. Notice of General Meeting — Material Disclosures
Where SR is required, the notice of the general meeting must contain certain material facts. Mnemonic: F-A-C-T
| Letter | Disclosure |
|---|---|
| F | Full material Facts |
| A | Amount to be invested in buyback |
| C | Class of securities to be bought back |
| T | Time limit for completion |
## 5. Modes of Buyback (Who can the company buy from?)
Buyback may be made from:
1. Existing Shareholders — on a proportionate basis
2. Open Market
3. ESOPs / Sweat Equity Shares (SES) holders, etc.