Question:hard

Buy back of shares is meant for

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Check whether the buy back rule under Indian company law covers only public limited companies, or private ones too.
Updated On: Jul 13, 2026
  • Public limited companies but not in India
  • Public limited companies in India
  • Only American companies
  • None of these
Show Solution

The Correct Option is D

Solution and Explanation

This question is about which companies are allowed to carry out a buy back of shares under Indian law.

  1. Public limited companies but not in India: This is wrong immediately, since India itself allows buy back of shares under its own Companies Act rules.
  2. Public limited companies in India: This sounds right at first, but it leaves out private limited companies, which are also permitted to buy back their own shares under the same law. So this option is too narrow to be fully correct.
  3. Only American companies: Buy back of shares is not an American only rule, it is followed in many countries, India included, so this is wrong.
  4. None of these: Since the rule covers both public and private limited companies in India, and not just American firms, no single option above states this fully and correctly. This is the correct answer.

The trap in this question is option (2), which looks right but quietly narrows the rule down to only public limited companies when private limited companies qualify too.

Let's summarize:

  • India's Companies Act allows both public and private limited companies to buy back shares.
  • The rule is not restricted to American companies or to companies outside India.

So the correct answer is none of these.

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