Corporate and Other LawsMCQQuestion 12533 of 300
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Under Section 68(2)(d) of the Companies Act, 2013, what is the maximum permissible ratio of aggregate secured and unsecured debts owed by the company to the paid-up capital and its free reserves after a buy-back?

Select Your Answer (Keyboard: A, B, C, D)
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Correct Answer

✅ Option A — Not more than 2:1

All Options:

  • ANot more than 2:1 ✓
  • BNot more than 1:1
  • CNot more than 3:1
  • DNot more than 1.5:1

Detailed Solution & Explanation

Correct Answer: Option **A** (Not more than 2:1) **Statutory Provision (Section 68 - Power of Company to Purchase its Own Securities (Buy-back)):** Section 68(2)(d) mandates that the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back is not more than twice the paid-up capital and its free reserves (2:1), unless a higher ratio has been notified for specific classes. Therefore, Option A is the correct legal position under the ICAI curriculum.

More Questions from Corporate and Other Laws

Under Section 77(1) of the Companies Act, 2013, within what initial statutory period must a company register a charge created on its property or assets with the Registrar of Companies (ROC)?

Under Rule 3(3) of the Companies (Acceptance of Deposits) Rules, 2014, what is the maximum aggregate limit of deposits that an eligible public company can accept from its members and the public?

Which of the following is a requirement for a company to buy back its securities under the Companies Act, 2013?

What is the tax treatment of buyback of shares by an unlisted company?

Explain the concept of differential rights and its significance in the context of buyback of securities.

What are the legal provisions governing the buyback of securities by a company in India?

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