The MCA amended the Companies (Share Capital and Debentures) Rules, 2014 ("Share Capital Rules") in relation to buy-back calculation for private companies and unlisted public companies, by issuing a notification on March 10, 2016 ("MCA Notification"). As per the provisions of the Share Capital Rules, auditors of such a company, proposing to buy- back its securities, are required to submit a report to its board of directors, inter alia stating that the audited accounts on the basis of which the calculation for the buy-back was done, is not more than 6 (six) months old from the date of the offer document. The MCA Notification makes an exception in the event that the audited accounts are more than 6 (six) months old, allowing the calculation for the buy-back to be done on the basis of un-audited accounts not older than 6 (six) months, from the date of the offer document, which are subjected to limited review by the auditors of the company.
The MCA Notification will allow companies to proceed with buy-back of their securities based on the most recent un-audited accounts, if the audited accounts are more than 6 (six) months old.
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