Rule 17 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 17 is the procedure rulebook for a buy-back by a private company or an unlisted public company. It lists what the explanatory statement must disclose, then walks through the SH-8 letter of offer, the SH-9 declaration of solvency, the offer period, payment, the register in SH-10 and the return in SH-11. This article states the rule as amended up to G.S.R. 43(E) dated 21 January 2023 per the MCA e-book; later amendments should be checked.
Rule 17 applies "unless stated otherwise" to private companies and unlisted public companies. After a special resolution the company files an SH-8 letter of offer and an SH-9 solvency declaration with the Registrar, dispatches the offer within twenty days, keeps it open for fifteen to thirty days, pays in cash from a separate bank account, keeps an SH-10 register and files an SH-11 return with a declaration signed by two directors. Sections 68 to 70 of the Act set the substantive limits; see our posts on section 68 and sections 69-70.
Who the rule covers
Unless stated otherwise, the norms in rule 17 are for private companies and unlisted public companies. Sub-rules (3) and (13) also mention a listed company's filing with the Securities and Exchange Board; the SEBI regulations are outside this article. If you are planning a buy-back, our buy-back of shares service covers the documentation.
The explanatory statement: sub-rule (1)
The explanatory statement annexed to the general meeting notice under section 102 must contain these disclosures:
| Clause | Disclosure |
|---|---|
| (a) | Date of the board meeting that approved the proposal. |
| (b) | Objective of the buy-back. |
| (c) | Class of shares or securities to be bought back. |
| (d) | Number of securities proposed to be bought back. |
| (e) | Method to be adopted. |
| (f) | Price of the buy-back. |
| (g) | Basis of arriving at the price. |
| (h) | Maximum amount to be paid and the sources of funds. |
| (i) | Time limit for completion. |
| (j) | Aggregate shareholding of promoters, directors of a corporate promoter, directors and KMP on the date of the notice; shares bought or sold by them in the twelve months before the board meeting and up to the notice date; the maximum and minimum prices with dates. |
| (k) | If those persons intend to tender shares: the quantum, and details of their transactions and holdings for the last twelve months before the board meeting (number, price and date of acquisition). |
| (l) | Confirmation that no defaults subsist in repayment of deposits and interest, redemption of debentures or preference shares, dividend due to any shareholder, or repayment of term loans and interest to a financial institution or banking company. |
| (m) | Confirmation of the Board's full enquiry and opinion on solvency. |
| (n) | A report to the Board by the auditors. |
Clause (m) has three limbs: no grounds on which the company could be found unable to pay its debts immediately after the meeting date; ability to meet liabilities as they fall due, and no insolvency, within one year; and liabilities, including prospective and contingent ones, taken into account as if the company were being wound up under the Companies Act, 2013.
Clause (n): the auditors report to the Board that they have inquired into the company's affairs, that the permissible capital payment is in their view properly determined, that the audited accounts used are not more than six months old from the offer document, and that the Board formed the clause (m) opinion on reasonable grounds. A proviso inserted on 10 March 2016 allows unaudited accounts not older than six months, subjected to limited review by the auditors, where the audited accounts are older.
Drafting note: in clause (k) the sub-items are numbered (i) and (iii) with no (ii), and the rule has no sub-rule (11) between (10) and (12). We read the text as printed and have not renumbered anything.
The letter of offer and solvency declaration
SH-8 (sub-rule (2)). A company authorised by a special resolution files with the Registrar, before the buy-back, a letter of offer in Form SH-8 with the fee. The letter must be dated and signed on behalf of the Board by not less than two directors, one of whom is the managing director where there is one. The fee is as provided in the Companies (Registration Offices and Fees) Rules, 2014.
SH-9 (sub-rule (3)). Along with the letter of offer the company files a declaration of solvency in Form SH-9 with the fee, signed by at least two directors (one the managing director, if any) and verified by an affidavit as specified in the Form. A listed company files with the Registrar and the Securities and Exchange Board.
Dispatch and the offer period
| Step | Rule |
|---|---|
| Dispatch of letter of offer (4) | Immediately after filing with the Registrar, but not later than twenty days from filing. |
| Offer period (5) | Not less than fifteen days and not more than thirty days from dispatch. A proviso, inserted on 29 March 2016, lets the offer stay open for less than fifteen days where all members agree. |
| Over-subscription (6) | If more is offered than the company will buy, acceptance is proportionate per shareholder. |
| Verification (7) | Within fifteen days from closure of the offer. Securities lodged are deemed accepted unless rejection is communicated within twenty-one days from closure. |
| Separate bank account (8) | Opened immediately after closure; the entire sum due as consideration is deposited. |
| Payment or return (9) | Within seven days of the time specified in sub-rule (7): pay in cash those whose securities are accepted, or return certificates for securities not accepted (or the balance on part acceptance). |
What the company must ensure: sub-rule (10)
The company must ensure that:
- the letter of offer contains true, factual and material information, is not misleading, and states that the directors accept responsibility for it;
- no new shares, including bonus shares, are issued from the date of the special resolution to the closure of the offer, except those arising from outstanding convertible instruments;
- the offer confirms the opening of a separate, adequately funded bank account and payment of consideration only in cash;
- the offer is not withdrawn once announced;
- no money borrowed from banks or financial institutions is used; and
- the proceeds of an earlier issue of the same kind of shares or specified securities are not used for the buy-back.
Register and return: sub-rules (12) to (14)
The company keeps a register of bought-back securities in Form SH-10 at its registered office, in the custody of the secretary or another person the Board authorises, who authenticates the entries. After the buy-back, the company files with the Registrar (and, for a listed company, SEBI) a return in Form SH-11 with the fee. Sub-rule (14) requires a declaration with the SH-11, signed by two directors including the managing director, if any, certifying compliance with the Act and the rules. This was substituted on 21 January 2023; the earlier SH-15 certificate is not the current rule.
Example
Lakshya Textiles Private Limited passes a special resolution for a buy-back. Two directors, including its managing director, sign the SH-8 and SH-9. The letter is dispatched within twenty days of filing and the offer stays open for twenty days. After closure the company opens a separate bank account, deposits the full consideration, verifies the offers within fifteen days and pays within seven days of the verification period. It then enters the securities in the SH-10 register and files SH-11 with the directors' declaration.
Need help with a buy-back?
A buy-back runs on tight periods and several filings. We prepare the board and shareholder papers, the letter of offer and the return, and check each step against the rule. Start with our buy-back of shares page.
Key takeaways
- Rule 17's norms are for private companies and unlisted public companies.
- The explanatory statement carries disclosures (a) to (n), including solvency confirmations and an auditors' report.
- SH-8 and SH-9 go to the Registrar before the buy-back; the offer stays open fifteen to thirty days.
- Payment is in cash from a separate bank account; no borrowed money, no new shares, no withdrawal.
- SH-10 is the register; SH-11 is the return with a two-director declaration.
Read next
- Rule 16 of the Share Capital Rules: company money for employee trusts
- Rules 1, 2, 3 and 15 of the Share Capital Rules: scope and SH-7
- How to do a buy-back: SH-8, SH-9 and SH-11 process
- Section 68: buy-back of securities
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.