Share Buyback: Legal Requirements and Process
Share Buyback: Legal Requirements and Process
The provisions for the buyback of shares were introduced in the Companies Act, 1956, effective October 31, 1998, and SEBI regulations, 1999.
- Section 68 of the Companies Act, 2013 empowers a company to purchase its own shares and other specified securities.
- Buyback refers to the purchase by the buyer of something already sold by the said buyer.
- Buyback of shares means the purchase of its own shares already issued by the company.
- It is a process by which a
Business Financing: Sources and Types
Classification of Sources of Financing
A. According to Ownership:
- Own Financing: Funds are owned by the company. For example, capital from partners.
- Foreign Financing: Funds are not owned by the company. For example, bank loans.
B. According to the Source:
- Internal Financing: Funds come from inside the company. For example, undistributed profits that are within the reserves.
- External Financing: Funds come from outside the company. For example, credits extended by suppliers.
C. According to the Term:
- Long-
Understanding Company Finances: Liquidity, Solvency, and Debt
Liquidity
Liquidity is the ease with which an asset can be converted into cash without significant loss of value. It represents the ability of a company to meet its short-term payment obligations to suppliers, workers, banks, etc. A company has liquidity if it can meet all its short-term payment obligations.
When a company lacks liquidity, it previously was said to be in default. Now, it enters into an arrangement with creditors. This situation is overseen by a judge. A group of experts, appointed
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