Schedule I : Contents of Explanatory Statement
(See rule 4)
The Explanatory statement to the notice for special resolution for buy-back shall, inter-alia, contain the following:-
(i) the date of the Board meeting at which the proposal for buy-back was approved by the Board of Directors of the company;
(ii) the necessity for the buy-back;
(iii) the class of security intended to be purchased under the buy-back;
(iv) the method to be adopted for the buy-back;
(v) the maximum amount required under the buy-back and the sources of funds from which the buy-back would be financed;
(vi) the basis of arriving at the buy-back price;
(vii) the number of securities that the company proposes to buy-back;
(viii) the time limit for the completion of buy-back;
(ix)(a) the aggregate shareholding of the promoter and the directors of the promoters, where the promoter is a company and of persons who are in control of the company as on the date of the notice convening the General Meeting;
(b) aggregate number of equity shares purchases or sold by persons including persons mentioned in (a) above during a period of six months preceding the date of the Board Meeting at which the buy-back was approved from date till date of notice convening the general meeting;
(c) the maximum and minimum price at which purchases and sale referred to in (b) above were made along with the relevant date;
(x) intention of the promoters and persons in control of the company to tender shares for buy-back indicating the number of shares, details of acquisition with dates and price;
(xi) a confirmation that there are no defaults subsisting in repayment of deposits, a redemption of debentures or preference shares or repayment of term loans to any financial institutions or banks;
(xii) a confirmation that the Board of Directors has made a full enquiry into the affairs and prospects of the company and that they have formed the opinion,-
(a) that immediately following the date on which the General Meeting is convened there will be no grounds on which the company could be found unable to pay its debts;
(b) as regards its prospects for the year immediately following that date that, having regard to their intentions with respect to the management of the company’s business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to meet its liabilities as and when they fall due and will not be rendered insolvent within a period of one year from that date; and
(c) in forming their opinion for the above purposes, the directors shall take into account the liabilities as if the company were being wound up under the provisions of the Companies Act, 1956 (including prospective and contingent liabilities);
(xiii) a report addressed to the Board of Directors by the company’s auditors stating that-
(a) they have inquired into the company’s state of affairs;
(b) the amount of the permissible capital payment for the securities in question is in their view property determined; and
(c) the Board of directors have formed the opinion as specified in clause (xii) on reasonable grounds and that the company, having regard to its state of affairs, will not be rendered insolvent within a period o
f one year from that date;
(xiv) the price at which the buy-back of shares shall be made;
(xv) if the promoters intend to offer their shares-
(a) the quantum of shares proposed to be tendered; and
(b) the details of their transactions and their holdings for the last six months prior to the passing of the special resolution for buy back including information of number of shares acquired, the price and the date of the acquisition.
1. See Notification No. 502(E), dated 6th. July, 1999.
2. Published in the Gazette of India, Part II, Section 3, sub-section (i), dated 6th July, 1999.
3. Substituted for the word “Board” by the Pvt. Ltd. Company and Unlisted Public Limited Company (Buy-back of Securities) (Amendment) Rules, 2000, w.e.f. 2nd. March, 2000.
4. Inserted by the Pvt. Ltd. Company and Unlisted Public Company (Buy-back of Securities) (Amendment) Rules, 2000, w.e.f. 2nd. March, 2000.