The correct answer is: C. 25% of fully paid equity share capital.
The Companies Act, 2013 allows a company to buy back its own shares subject to certain conditions. One of the conditions is that the buy back shall not exceed 25% of the fully paid-up equity share capital of the company.
The buy back of shares can be made through open market purchase, tender offer or through a combination of both. The company has to disclose the details of the buy back in a notice to the stock exchange and also to the shareholders.
The buy back of shares can be a good way for a company to return capital to its shareholders. It can also be used to increase the earnings per share of the company. However, the buy back of shares should be done only after careful consideration of all the factors involved.
Here is a brief explanation of each option:
- Option A: 5% of its total capital. This is not the correct answer because the buy back of shares can be up to 25% of the fully paid-up equity share capital of the company.
- Option B: 25% of nominal share capital. This is not the correct answer because the buy back of shares can be up to 25% of the fully paid-up equity share capital of the company.
- Option C: 25% of fully paid equity share capital. This is the correct answer because the buy back of shares can be up to 25% of the fully paid-up equity share capital of the company.
- Option D: None of the above. This is not the correct answer because Option C is the correct answer.