Regarding buy-back of shares, the chamber stated that companies should be permitted to buy back their own shares for extinguishment of the bought back shares as also for their reissuance as was recommended by working group on Companies Act 1956.

The working group had provided for suitable additional safeguards with regard to buy back as treasury operations by recommending that such shares will not be reissued for 24 months after the date of last buy back will have no voting and dividend rights till the time they are held by companies.

Ficci observed that the several countries allow for buy back as treasury function whereshares bought back are in effect treated as investment. This has been found particularly useful by companies in situations where market price of their shares become unduly low and therefore an attractive buy. The said companies, may at the same time, plan to reissue shares at a later date.

The chamber felt that the stipulations of section 372 of the Act was totally economic scenario. Ficci stated that Indian corporate sector has over the last decades considerably matured to take sound financial decisions and government approvals are uncalled for particularly when the shareholders and financial institutions are involved in these decisions.

The section 372 of the Companies Act 1956 restricts the aggregate investments of a company in other body corporates to the extent of 30 per cent of its subscribed capital and free reserves. The investment in any body corporate cannot exceed 30 per cent of its subscribed capital and free reserves of the lending company for making loans to other companies. The investmentsand loans in excess of these limits require the sanction by a resolution of investing company in a general meeting and the approval of the Central government.

Ficci observed that the previous government had aptly recognised the need for granting freedom to the corporates and sought to remove the requirements of government approval for inter corporate investments and loans.