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sec 77 b of companies act 1956

(Querist) 19 July 2008 This query is : Resolved 
why in sec 77 b of companies act a subsidiary co cannot buy the shares and other subsidiary co is also not allowed to buy the shares of the holding co.
suman (Querist) 19 July 2008
plz reply...
Guest (Expert) 21 July 2008
The prohibition appears to safeguard the interst of the Holding Company which is the controller of the affairs of the subsidiary. If the subsidiary starts acquiring the shares of its masters, then (eventhough it is not possible)the holding company may have problems.
Manish Singh (Expert) 22 July 2008
Mr. Kotresh,
Plesae do homework before opining anything.
It would have been better if you had gone through the the section first and then would have made any reply.

Anywyz, the provisions regarding buy back of shares is extremely valuable for the investors since its their hard earned money.
To safeguard their interest, the provisions under sec 77B has been inserted which prohibits any company from buyback its own shares without complying with other provisions of the Act.
If it allowed, it would lead to malpractice in terms of securities listed on stock exchanges.


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