A buy-back is a company purchasing its own shares from its shareholders and cancelling them. Companies use it to return surplus cash, support the share price, or consolidate ownership. Because it reduces capital, the law sets limits on how much can be bought back, the funds that may be used, the debt the company can carry afterwards, and the time each step can take.

This article walks through a buy-back by an unlisted company under Section 68, along with the additional steps a listed company follows under the SEBI (Buy-Back of Securities) Regulations, 2018, as amended with effect from 1 August 2026.

Limits and Conditions

Step-by-Step Procedure

Step 1: Notice and Agenda for the Board Meeting – at least 7 days before the meeting
(Applicable to All Companies)
Section 173(3) of the Companies Act, 2013 read with SS-1

• Notice of the Board Meeting is required to be given in writing to every director at the address registered with the company, by hand, post or electronic means.
• The notice is required to be accompanied by the agenda, notes on agenda, draft resolutions and supporting papers for the proposed buy-back.
• The notes are required to cover the size, price, method (tender offer or open market), sources of funds, the computation of limits and debt-equity ratio, and the draft declaration of solvency.
• A meeting to transact urgent business may be called at shorter notice, provided at least one independent director (if any) is present. If none is present, the decisions are final only on ratification by at least one independent director.

Step 2: Prior Intimation to Stock Exchanges – at least 2 working days before the meeting
(Applicable in case of Listed Company)
Regulation 29 of the SEBI (LODR) Regulations, 2015

Prior intimation of the date of the meeting at which the Board will consider the proposal for buy-back of securities is required to be given to the stock exchanges. The 2 working days exclude the date of intimation and the date of the meeting.

Step 3: Board Meeting to Approve the Buy-back – on the date fixed
(Applicable to All Companies)
Sections 68, 173 and 179(3) of the Companies Act, 2013 read with SS-1

• The Board is required to approve the buy-back (where within 10%) or recommend it to members (where above 10%), including the number of shares, the price, the method and the source of funds.
• The Board is required to form an opinion on the company’s solvency and approve the declaration of solvency to be signed by at least two directors, one of whom is the Managing Director, if any.
• For a listed company, the shares held by promoters and the promoter group are frozen at ISIN level from the date of the Board or special resolution until the offer closes, except for tendering in a tender offer and certain prior encumbrances.

Step 4: Disclosure of Outcome to Stock Exchanges and Website – within 30 minutes of conclusion of the meeting
(Applicable in case of Listed Company)
Regulation 30(6) and 30(8) read with Schedule III of the SEBI (LODR) Regulations, 2015

• The outcome of the meeting, including the approval of the buy-back, its size, price and method, is required to be disclosed to the stock exchanges within 30 minutes of the conclusion of the meeting, along with the time of commencement and conclusion of the meeting.
• If the meeting ends after trading hours but more than 3 hours before the next trading session starts, the disclosure is required within 3 hours of its conclusion.
• The same disclosure is required to be hosted on the company’s website simultaneously and retained there for at least 5 years (Regulation 30(8)).

Step 5: Filing of Board Resolution with ROC – within 30 days of the meeting
(Applicable to Public Companies)
Section 117 read with Section 179(3) of the Companies Act, 2013

The Board resolution for buy-back of securities falls under Section 179(3) and is required to be filed with the Registrar of Companies in e-Form MGT-14. Private companies are exempt from filing resolutions passed under Section 179(3).

Step 6: Minutes of the Board Meeting – draft within 15 days, signed within 30 days
(Applicable to All Companies)
Section 118 of the Companies Act, 2013 read with Paragraph 7 of SS-1

• Draft minutes are required to be circulated to all members of the Board within 15 days of the meeting. Members may give their comments within 7 days of receipt.
• Minutes are required to be entered in the Minutes Book within 30 days of the meeting and signed by the Chairman.
• A copy of the signed minutes is required to be circulated to all members within 15 days of signing.

Step 7: Shareholder Approval (for buy-back above 10%) – notice at least 21 clear days before the meeting
(Applicable to All Companies)
Sections 68(2)(b), 68(3), 102 and 110 of the Companies Act, 2013

• A special resolution is required, passed at a general meeting or, for a listed company, through postal ballot with e-voting.
• The explanatory statement is required to disclose the necessity, the class and number of securities, the amount to be invested, the price and basis, and the time limit for completing the buy-back.
• The resolution is required to be filed in e-Form MGT-14 within 30 days. Listed companies also file the proceedings and voting results with the stock exchanges.

Step 8: Public Announcement and Intimation to Shareholders – within 2 working days of the resolution
(Applicable in case of Listed Company)
Regulations 7, 16 and 22A of the SEBI (Buy-Back of Securities) Regulations, 2018

• A public announcement is required to be published in one English national daily, one Hindi national daily and one regional language daily, within 2 working days of the Board resolution or the declaration of the postal ballot results, and filed with SEBI and the stock exchanges.
• An electronic intimation of the buy-back is required to be sent to all shareholders within 1 working day of the public announcement.
• From 1 August 2026, appointing a merchant banker is optional. Where none is appointed, the company, secretarial auditor, statutory auditor, stock exchanges and compliance officer take on the merchant banker’s responsibilities (Regulation 24A).

Step 9: Declaration of Solvency and Letter of Offer – before the offer opens
(Applicable to All Companies)
Section 68(6) of the Companies Act, 2013 read with Rule 17 of the Companies (Share Capital and Debentures) Rules, 2014

• The declaration of solvency in e-Form SH-9, signed by at least two directors including the Managing Director (if any), is required to be filed with the Registrar (and with SEBI, for a listed company) before the buy-back is made.
• Where the buy-back is approved by special resolution, the letter of offer is required to be filed with the Registrar in e-Form SH-8 and dispatched to shareholders immediately, and in any case within 20 days of filing.
• For a listed company’s tender offer, the letter of offer is dispatched within 2 working days of the record date, following the record date intimation under Regulation 42.

Step 10: Escrow Account – within 2 working days of the public announcement
(Applicable in case of Listed Company)
Regulations 9 and 20 of the SEBI (Buy-Back of Securities) Regulations, 2018

The consideration is required to be secured in an escrow account. A bank guarantee used for the escrow is required to be in favour of the merchant banker (or the statutory auditor, where no merchant banker is appointed), and remain valid until 30 working days after the buy-back period or completion of all obligations, whichever is later.

Step 11: Offer Period – unlisted: 15 to 30 days; listed open market: opens within 4 working days, closes within 66 working days
(Applicable to All Companies)
Rule 17 of the Companies (Share Capital and Debentures) Rules, 2014; Regulation 17 of the SEBI (Buy-Back of Securities) Regulations, 2018

• For an unlisted company, the offer is required to remain open for at least 15 and not more than 30 days from the date of dispatch of the letter of offer. A shorter period is permitted if all members agree.
• For a listed company’s open market buy-back, the offer is required to open within 4 working days of the public announcement and close within 66 working days of opening. Tender offers follow the timelines in the SEBI Buy-back Regulations.

Step 12: Verification and Payment of Consideration – unlisted: verification within 15 days, payment within 7 days
(Applicable to All Companies)
Section 68 of the Companies Act, 2013 read with Rule 17(7) and (8)

• Offers received are required to be verified within 15 days of the closure of the offer, with acceptance on a proportionate basis if the offer is oversubscribed. Offers not rejected within 21 days of the closure of the offer are deemed accepted.
• Consideration is required to be paid to shareholders whose shares are accepted, and the certificates of unaccepted shares returned, within 7 days of the completion of verification. Listed companies follow the shorter timelines under the SEBI Buy-back Regulations.
• An unlisted company is required to open a separate bank account immediately after the offer closes and deposit the full consideration payable for the shares accepted, and cannot use borrowed funds from banks or financial institutions for the buy-back.

Step 13: Extinguishment of Shares and Register of Buy-back – within 7 days of completion of buy-back
(Applicable to All Companies)
Sections 68(7) and 68(9) of the Companies Act, 2013 read with Rule 17(12)

• The shares bought back are required to be extinguished and physically destroyed (or extinguished through the depository) within 7 days of the last date of completion of the buy-back.
• A register of shares bought back is required to be maintained in Form SH-10.
• Where the buy-back is out of free reserves or securities premium, a sum equal to the nominal value of shares bought back is required to be transferred to the Capital Redemption Reserve (Section 69).

Step 14: Return of Buy-back (e-Form SH-11) – within 30 days of completion of buy-back
(Applicable to All Companies)
Section 68(10) of the Companies Act, 2013 read with Rule 17(13)

The return of buy-back is required to be filed with the Registrar (and SEBI, for a listed company) in e-Form SH-11, containing a declaration by two directors, including the Managing Director (if any), that the buy-back complies with the Act and the Rules.

After the buy-back, the company cannot make a further issue of the same kind of shares for 6 months, other than bonus shares, conversion of warrants or debentures, or shares under ESOPs and sweat equity (Section 68(8)).

Post-Meeting Filings and Disclosures

Penalties for Non-Compliance

Buy-back at a Glance

Day 0 = Date of Board resolution (or special resolution, where shareholder approval is needed)