Buy-Back of Shares Under Section 68: Private Company Controls
Buy-back is not simply a founder exit payment. Section 68 controls sources, authorisation, approvals, limits, solvency and post-buy-back extinguishment of securities.
\nFor broader context, see the Companies Act, MCA and Startup Compliance Hub.
Section 68 base
Section 68 covers power of company to purchase its own shares or other specified securities. It includes source-of-funds conditions and states that buy-back shall not be made out of proceeds of an earlier issue of the same kind of shares or securities.
Use the Companies Act Related-Party Transaction Approval Checker to work through the related inputs before acting.
\nBuy-back control table
| Control | Evidence |
|---|---|
| Articles authorisation | Check buy-back power in Articles. |
| Board/special resolution route | Determine approval threshold and route. |
| Solvency declaration/support | Prepare finance and board evidence. |
| Offer/payment records | Track shareholder communication and payment. |
| Extinguishment/destruction | Section 68 requires extinguishment and physical destruction within the specified period after completion. |
For the connected rule, example or next step, see Share Transfer and Transmission Under Section 56: Private Company Checklist.
\nFinance checks
- Confirm source of funds.
- Check debt-equity and capital structure impact.
- Model tax/accounting impact separately.
- Update registers and share capital records.
- Preserve proof of extinguishment and post-buyback cap table.
For the connected rule, example or next step, see Preference Shares Issue and Redemption Under Section 55.
\nFinin2min warning
Official sources used
This article is intentionally source-limited to official India Code / MCA material. Verify final filing positions with the latest Act, Rules, MCA forms and portal advisories before publishing.
- India Code: Section 68 — Power of Company to Purchase its Own Securities
- India Code: Section 88 — Register of Members etc.
- India Code: Section 92 — Annual Return
- India Code: Companies Act, 2013 official PDF
FAQs
Section 68 covers power of company to purchase its own shares or specified securities.
Section 68 contains a restriction on buy-back out of proceeds of earlier issue of the same kind of shares/securities.
Section 68 requires extinguishment and physical destruction of bought-back securities within the specified timeline.
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- Companies Act & MCA
- Official starting point
- www.mca.gov.in