Asteria Ltd., a listed company with equity share capital of 6,000 lakh and free reserves of 10,000 lakh as per the latest audited balance sheet,…

CA Intermediate · Advanced Accounting · MTP · September 2025
Asteria Ltd., a listed company with equity share capital of 6,000 lakh and free reserves of 10,000 lakh as per the latest audited balance sheet, proposes to buy back 20% of its equity capital at 40 per share. The Articles of Association authorize buy-back. The Board passed a resolution in March 2025 to proceed. To fund this, the company decided to sell investments worth - 5,000 lakh, which have a book value of 6,000 lakh. It has existing borrowings of 9,500 lakh. The company has not made any default in repayment of term loans, debentures, or dividend payments and has filed all statutory returns under Sections 92, 123, 127, and 129 of the Companies Act, 2013. It had completed its previous buy-back in October 2024. The Board now seeks to implement the buy-back by July 2025.
(A) Yes, because Board Resolution is always sufficient
(B) No, it must always be by special resolution in general meeting.
(C) No, because 20% buy-back exceeds the 10% limit allowed for Board Resolution alone.
(D) Yes, because the Articles authorize it and 20% is within the 25% limit.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

No, because 20% buy-back exceeds the 10% limit allowed for Board Resolution alone.

Topics: AS 21

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