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Buy Back of Shares – Expertvuw
Capital Restructuring

Buy-back of Shares by Unlisted Companies

Last updated: 2 October 2026

A buy-back lets a company return surplus cash to shareholders by purchasing its own shares — or give a shareholder an exit. Our team checks the limits, prepares the approvals and offer documents, and completes the filings within the deadlines.

Overview

How a buy-back works

Sections 68 to 70 of the Companies Act, 2013 and the Share Capital Rules set strict conditions for an unlisted company buying back its own shares:

  • The buy-back must be authorised by the articles.
  • Up to 10% of paid-up capital and free reserves can be approved by the board; up to 25% needs a special resolution. Equity bought back in a year cannot exceed 25% of paid-up equity capital.
  • After the buy-back, the debt-equity ratio must not exceed 2:1.
  • It is funded from free reserves, securities premium or the proceeds of a different kind of issue.
  • There must be a gap of one year from any previous buy-back.
  • The company files a letter of offer (SH-8) and a declaration of solvency (SH-9), keeps a register (SH-10), and files a return (SH-11) within 30 days of completion. Bought-back shares are extinguished.

The tax treatment of buy-backs for shareholders changed in October 2024 and again from 1 April 2026. We work with your tax adviser so shareholders know the tax effect before they accept.

Based on the Companies Act, 2013 and the rules made under it. Last updated: 27 September 2026.

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What This Service Covers

What our buy-back service covers

1

Checking the articles, limits, debt-equity ratio and funding sources

2

Board or special resolution and explanatory statement

3

Letter of offer (SH-8) and declaration of solvency (SH-9)

4

Payment, register of buy-back (SH-10) and extinguishment of shares

5

Return of buy-back (SH-11) within 30 days, with tax coordination

Key facts at a glance

10% / 25%

Board approval up to 10%; special resolution up to 25%

2:1

Maximum debt-equity ratio after the buy-back

1 year

Minimum gap between two buy-backs

SH-9

Declaration of solvency by directors

30 days

To file SH-11 after completion

Extinguished

Bought-back shares are cancelled

Common Issues

Where buy-backs commonly go wrong

Buy-back rules leave little room for error.

Limits miscalculated

Free reserves or debt-equity worked out wrongly, making the buy-back invalid.

Articles silent

Articles do not authorise a buy-back and are not amended first.

Tax not explained

Shareholders accept without understanding the tax effect.

Related Services

Related services

Other ways to restructure capital.

Bonus Shares

Capitalising reserves.

Dividends

Distributing profits.

Share Transfer

Exit by transfer to another holder.

MOA & AOA Alteration

Enabling the buy-back.

Documents Required

Documents we need from you

Financial Documents

Corporate Documents

Our Process

How we handle your buy-back

1

Feasibility

Limits, ratio and funding checked.

2

Approvals

Board or special resolution passed.

3

Offer

Letter of offer and declaration of solvency filed.

4

Acceptance

Shareholder acceptances received.

5

Payment

Consideration paid and shares extinguished.

6

Return

SH-11 filed within 30 days.

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After the Buy-back

After the buy-back

Complete the records and respect the cooling-off rules.

Extinguishment

Shares cancelled and certificates destroyed or demat debited.

Register

SH-10 register and register of members updated.

Restrictions

No further issue of the same kind of shares for a set period, except permitted issues.

Tax

Shareholders report the transaction in their returns as advised.

Get in Touch

Share your query and our team will reply during business hours.






    FAQs

    Frequently Asked Questions

    How much can a company buy back?

    Up to 25% of paid-up capital and free reserves, with board approval up to 10% and a special resolution above that.

    Secured and unsecured debt must not exceed twice the paid-up capital and free reserves after the buy-back.

    Not within one year of a previous buy-back offer.

    SH-8 letter of offer, SH-9 declaration of solvency and SH-11 return of buy-back within 30 days of completion.

    The rules changed in October 2024 and again from 1 April 2026; shareholders should confirm the current treatment with their tax adviser.

    About Expertvuw

    Who handles your case

    CS Chetna Shoor, Company Secretary and Director, Expertvuw

    CS Chetna Shoor

    ACS – Director, Expertvuw Management Pvt Ltd

    This work is handled by Expertvuw’s team, with filings made on the MCA portal. Certifications and audits required by law are issued by independent practising professionals engaged for your case.

    Expertvuw Management Pvt Ltd