Section 086

Section 086

Prohibition of purchase by company or giving of loans by it for purchase of its shares. [1][(1) Omitted]

(2) No public company or a private company being subsidiary of a public company shall give financial assistance whether directly or indirectly for the purpose of, or in connection with, a purchase or subscription made or to be made, by any person of any shares in the company or in its holding company.

(3) Nothing in sub-section (2) shall apply to—

(a) the lending of money by a banking company in the ordinary course of its business;

(b) the provision by a company of money in accordance with any scheme approved by company through special resolution and in accordance with such requirements as may be specified, for the purchase of, or subscription for shares in the company or its holding company, if the purchase of, or the subscription for, the shares held by a trust for the benefit of the employees or such shares held by the employee of the company;

(c) the provision or securing an advance to any of its employees, including a chief executive who, before his appointment as such, was not a director of the company, but excluding all directors of the company, for purchase of shares of the company or of its subsidiary or holding company.

(4) Any violation of this section shall be an offence liable to a penalty of level 1 on the standard scale.

[1] Omitted through Companies Amendment Act, 2021 dated 03-12-2021. Before omitted it was:

“(1) No company having a share capital, other than a listed company shall have power to buy its own shares.”