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88. Power of a company to purchase its own shares.— (1) Notwithstanding anything contained in this Act or any other law, for the time being in force, or the memorandum and articles, a [mfn] {the word “listed” omitted by Companies (Amendment) Ordinance, 2020}[/mfn] company may, subject to the provisions of this section and the regulations specified in this behalf, purchase its own shares.

(2) The shares purchased by the company may, in accordance with the provisions of this section and the regulations, either be cancelled or held as treasury shares:

[Provided that shares purchased by an unlisted public company or a private company shall be cancelled and not be held as treasury shares:

Provided further that cancellation of shares under this section shall not be deemed to be a reduction of share capital within the meaning of section 89 and such shares shall be cancelled in such form and manner as may be
specified’] [mfn] {these two provisions were added through Companies (Amendment) Ordinance, 2020}[/mfn]

(3) The shares held by the company as treasury shares shall, as long as they are so held, in addition to any other conditions as may be specified, be subject to the following conditions, namely-

(a) the voting rights of these shares shall remain suspended; and

(b) no cash dividend shall be paid and no other distribution, whether in cash or otherwise of the company’s assets, including any distribution of assets to members on a winding up shall be made to the company in respect of these shares:

Provided that nothing in this sub-section shall prevent-
(a) an allotment of shares as fully paid bonus shares in respect of the treasury shares; and
(b) the payment of any amount payable on the redemption of the treasury shares, if they are redeemable.

(4) The board shall recommend to the members purchase of the shares.  The decision of the board shall clearly specify the number of shares proposed to be purchased, purpose of the purchase i.e. cancellation or holding the shares as treasury shares, the purchase price, period within which the purchase shall be made, source of funds, justification for the purchase and effect on the financial position of the company.

(5) The purchase of shares shall be made only under authority of a special resolution.

(6) The purchase of shares shall be made within a period as specified in the regulations.

(7) The proposal of the board to purchase shares shall, on conclusion of the board’s meeting, be communicated to the Commission and to the securities exchange on which shares of the company are listed.

(8) The purchase of shares shall always be made in cash and shall be out of the distributable profits or reserves specifically maintained for the purpose.

(9) The purchase of shares shall be made [mfn] {The words “either through a tender offer or” omitted by Companies (Amendment) Ordinance, 2020} [/mfn] through the securities exchange as may be specified.

(10) The company may dispose of the treasury shares in a manner as may be specified.

(11) Where a purchase of shares has been made under this section, the company shall maintain a register of shares so purchased and enter therein the following particulars, namely-

(a) number of shares purchased;
(b) consideration paid for the shares purchased;
(c) mode of the purchase;
(d) the date of cancellation or re-issuance of such shares;
(e) number of bonus shares issued in respect of treasury shares; and
(f) number and amount of treasury shares redeemed, if redeemable.

(12) Any violation of this section shall be an offence liable to a penalty of level 3 on the standard scale and shall also be individually and severally liable for any or all losses or damages arising out of such contravention.