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Quick Limited has Equity Capital ₹45 lakh (45,000 shares of ₹100), Reserves: General ₹74 lakh, Securities Premium ₹30 lakh, P&L ₹25 lakh, Revaluation Reserve ₹4 lakh, Statutory Reserve ₹6.5 lakh; Loan Funds ₹350 lakh. Market price ₹250; buy-back at 20% over market. Considering all three tests under Companies Act 2013, what is the maximum number of equity shares that can actually be bought back?
A11,250 shares
B14,500 shares
CNil shares
D6,000 shares
Answer & Solution
Correct answer: D. 6,000 shares
1. Step 1: Buy-back is permitted only to the extent of the most restrictive test.
2. Step 2: 25% paid-up = 11,250; resource test = 14,500; debt-equity (post-paydown) allows up to 6,000.
3. Step 3: Minimum of all three = 6,000 shares.
_Source: ICAI BoS CA Inter Paper 1 Practice MCQ Paper (89270bos-aps3012-int-p1), Q.13_