As per Section 68 of the Companies Act, 2013: debt-equity ratio after buy back should not exceed 2:1 (not 1:1); buy-back in a financial year cannot exceed 25% of paid-up capital and free reserves (not 20%); only fully paid-up shares can be bought back. Articles of Association must authorise and a special resolution is required, making option 4 correct.
A company can buy its own shares when-
CUET UG 2023 — Accountancy Company Accounts
2023mcqmedium
A company can buy its own shares when-
Official previous-year question
Held on 29 May 2023 · Verified 13 Jul 2026.
Options
- A
The debt - Equity ratio is not more than 1:1 after the buy back.
- B
The amount of buy back shares in any financial year not exceeding 20% of the paid-up capital and free reserves.
- C
Partly paid up shares are considered buy back.
- D
Article of Association must authorise and special resolution has been passed for the buy back of shares.
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