CA Inter P1 · Chapter 10 · Question 3 of 10
Case: After a proposed buyback, Harsha Ltd will have secured and unsecured debt of ₹3,60,00,000. Assuming no higher ratio has been notified for its class of company, to satisfy the debt-equity condition of section 68, the minimum aggregate of its paid-up capital and free reserves after the buyback must be:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹1,80,00,000
Explanation
Section 68 requires that the ratio of aggregate secured and unsecured debts owed by the company after the buyback should not be more than twice the paid-up capital and its free reserves. So equity must be at least 3,60,00,000 / 2 = ₹1,80,00,000.
More Buyback of Securities MCQs
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