REGISTERED NO. DL-33004/2001

The Gazette of India

EXTRAORDINARY

PART II — Section 2

PUBLISHED BY AUTHORITY

No. 40]

NEW DELHI, THURSDAY, NOVEMBER 22, 2001 / KARTKA 1,1923

Separate paging is given to this Part in order that it may be filed as a separate compilation.

LOK SABHA

The following Bill was introduced in Lok Sabha on 22nd November, 2001.

BILL No. 100 OF 2001

A Bill further to amend the Companies Act, 1956.

BE it enacted by Parliament in the Fifty-second Year of the Republic of India as

follows:—

1. (/) This Act may be called the Companies (Third Amendment) Act, 2001.

(2) It shall be deemed to have come into force on the 23rd day of October, 2001.

Short title and

commence-

ment.

1 of 1956.

2. In section 77A of the Companies Act, 1956 (hereinafter referred to as the principal

Act),—

(a) in sub-section (2) in clause (b), the following shall be inserted, namely:—

'Provided that nothing contained in this clause shall apply in any case

where—

(A) the buy-back is or less than ten per cent, of the total paid-up

equity capital and free reserves of the company; and

Amendment

of section

77A.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

(B) such buy-back has been authorised by the Board by means of

a resolution passed at its meeting:

Provided further that no offer of buy-back shall be made within a period

of three hundred and sixty-five days reckoned from the date of the preceding

offer of buy-back, if any.

Explanation.—For the purposes of this clause, the expression "offer of

buy-back" means the offer of such buy-back made in pursuance of the resolution

of the Board referred to in the first proviso;';

(6) in sub-section (4), for the words "special resolution", the words "special

resolution or a resolution passed by the Board" shall be substituted;

resolution under clause (b) of sub-section (2)", the words, brackets and letter "or the

Board has passed a resolution under the first proviso to clause (b) of that sub-

section" shall be inserted;

(d) in sub-section (8), for the words "within a period of twenty-four months",

the words "within a period of six months" shall be substituted.

Amendment

of section

292.

3. In section 292 of the principal Act, in sub-section (/), after clause (a), the following

clause shall be inserted, namely:—

"(aa) the power to authorise the buy-back referred to in the first proviso to

clause (b) of sub-section (2) of section 77 A;".

Repeal and

saving.

4. (/) The Companies (Amendment) Ordinance, 2001 is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken under the principal

Act, as amended by the said Ordinance, shall be deemed to have been done or taken under

the corresponding provisions of the principal Act, as amended by this Act.

Ord.7of2001.

SEC. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

STATEMENT OF OBJECTS AND REASONS

For a considerable time, the market sentiment has been very weak. Because of the

recent developments ui the United States of America and other places, the situation has

become worse.

2. Section 77A of the Companies Act, 1956 permits a company to purchase its own

shares or other specified securities (hereafter referred to as "buy-back") subject to the pro-

visions contained in that section. The Ministry of Finance (Department of Economic Affairs)

has suggested that the provisions for buy-back by companies should be liberalised with a

view to improving the market sentiment. Liberalisation has also been supported by the

Securities and Exchange Board of India, Financial Institutions and some others.

3. In view of the above, it was decided to liberalise certain provisions of section 77A of

the Companies Act, 1956 relating to buy-back and for this purpose, the Companies (Amend-

ment) Ordinance, 2001 (Ord. 7 of 2001) was promulgated on the 23rd day of October, 2001 so

as to inter alia,—

(a) provide that if the buy-back was to the extent of or less than ten per cent, of

the total paid-up capital and free reserves of the company and such buy-back had been

authorised by means of a resolution passed at its Board meeting, such buy-back shall

not require special resolution to be passed by a general meeting as required by clause

(b) of sub-section (2) of section 77 A which prohibits a company to purchase its own

shares or other specified securities unless a special resolution is passed in general

meeting of the company authorising such buy-back;

(b) provide that no offer of buy-back referred to in (a) above shall be made within

a period of three hundred and sixty-five days reckoned from the date of the preceding

offer of buy-back;

of section 77A of the Companies Act, 1956 to six months for issue of the same kind of

shares.

4. The Bill seeks to replace the said Ordinance.

ARUN JAITLEY.

NEW DELHI;

The \2th November, 2001

G.C.MALHOTRA,

Secretary-General,

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AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS, DELHI, 2 0 0 1 .

MQIP(PLU)MRND—3639QI—27-11-2001.