Section 88 — Power of a company to purchase its own shares

(1)
Notwithstanding anything contained in this Act or any other law, for the time being
in force, or the memorandum and articles, a28[…] company may, subject to the
provisions of this section and the regulations specified in this behalf, purchase its
own shares.

(2) The shares purchased by the company may, in accordance with the
provisions of this section and the regulations, either be cancelled or held as treasury
shares29[:]

28 Omitted word “listed” vide the Companies (Amendment) Act, 2021 dated 1st December, 2021.
29 Substituted “.” vide the Companies (Amendment) Act, 2021 dated 1st December, 2021.

30[Provided that shares purchased by an unlisted public company or a
private company shall be cancelled and not be held as treasury shares:

Provided further that cancellation of shares under this section shall not be
deemed to be a reduction of share capital within the meaning of section 89 and such
shares shall be cancelled in such form and manner as may be specified.]

(3) The shares held by the company as treasury shares shall, as long as
they are so held, in addition to any other conditions as may be specified, be subject
to the following conditions, namely—

(a) the voting rights of these shares shall remain suspended; and

(b) no cash dividend shall be paid and no other distribution, whether in
cash or otherwise of the company's assets, including any distribution
of assets to members on a winding up shall be made to the company
in respect of these shares:

Provided that nothing in this sub-section shall prevent—

(a) an allotment of shares as fully paid bonus shares in respect of the
treasury shares; and

(b) the payment of any amount payable on the redemption of the
treasury shares, if they are redeemable.

(4) The board shall recommend to the members purchase of the shares.
The decision of the board shall clearly specify the number of shares proposed to be
purchased, purpose of the purchase i.e. cancellation or holding the shares as
treasury shares, the purchase price, period within which the purchase shall be made,
source of funds, justification for the purchase and effect on the financial position of
the company.

(5) The purchase of shares shall be made only under authority of a
special resolution.

(6) The purchase of shares shall be made within a period as specified in
the regulations.

(7) The proposal of the board to purchase shares shall, on conclusion of
the board's meeting, be communicated to the Commission and to the securities
exchange on which shares of the company are listed.

(8) The purchase of shares shall always be made in cas h and shall be
out of the distributable profits or reserves specifically maintained for the purpose.

30 Inserted vide the Companies (Amendment) Act, 2021 dated 1st December, 2021.

(9) The purchase of shares shall be made 31[…] through the securities
exchange as may be specified.

(10) The company may dispose of the treasury shares in a manner as may
be specified.

(11) Where a purchase of shares has been made under this section, the
company shall maintain a register of shares so purchased and enter therein the
following particulars, namely—

(a) number of shares purchased;

(b) consideration paid for the shares purchased;

(c) mode of the purchase;

(d) the date of cancellation or re-issuance of such shares;

(e) number of bonus shares issued in respect of treasury shares; and

(f) number and amount of treasury shares redeemed, if redeemable.

(12) Any violation of this section shall be an offence liable to a penalty
of level 3 on the standard scale and shall also be individually and severally liable
for any or all losses or damages arising out of such contravention.

REDUCTION OF SHARE CAPITAL