Engagement
Buy-back of shares by a private company
Last reviewed 07 November 2026
Section 68 buy-backs, from board approval to the SH-11 return.
In short
A private company can buy back its own shares under section 68 of the Companies Act, 2013, out of free reserves, securities premium or the proceeds of a fresh issue. The board can approve up to 10% of paid-up capital and free reserves; up to 25% needs a special resolution. After the buy-back, the company's debt cannot exceed twice its paid-up capital and free reserves. The offer is filed in SH-8 with a declaration of solvency in SH-9, and the completed buy-back is reported in SH-11 within 30 days.
Overview
A buy-back returns money to shareholders and reduces the share capital. It is funded from free reserves, the securities premium account or the proceeds of a fresh issue of a different kind of shares, and only fully paid-up shares can be bought back.
The limits: a board resolution covers a buy-back of up to 10% of the paid-up equity capital and free reserves; above that, up to 25%, a special resolution is needed. The buy-back of equity shares in a financial year cannot exceed 25% of the paid-up equity capital, the company's debt after the buy-back cannot exceed twice its paid-up capital and free reserves, and there must be a gap of one year since any earlier buy-back offer.
The process: the resolution, the letter of offer filed with the Registrar in SH-8 with the declaration of solvency in SH-9, the offer kept open for 15 to 30 days, payment to shareholders, extinguishment of the shares within 7 days, the register of buy-back in SH-10, and the return in SH-11 within 30 days of completion. The whole buy-back must be completed within one year of the resolution. The tax treatment of a buy-back is a separate question for the company's tax adviser.
Key Deliverables
- Eligibility check: reserves, debt-equity ratio, defaults that bar a buy-back (section 70)
- Board and shareholder resolutions, and MGT-14 for a special resolution
- Letter of offer (SH-8) and declaration of solvency (SH-9)
- Offer process, acceptance and payment schedule
- Extinguishment of shares, register of buy-back (SH-10) and return (SH-11)
Documents & E-Forms
- SH-8
- SH-9
- SH-10
- SH-11
- MGT-14
When to Engage
Once the directors know how much they want to return to shareholders, and before any figure is promised, so the limits can be checked against the latest audited accounts.
Typical turnaround: Scoped in the engagement letter.
Frequently Asked
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