(1) Where a company proposes to purchase its own shares pursuant to section 67A of the Act, the directors of the company or, in the case of a company having more than two directors, the majority of the directors, shall make a declaration to the effect that they have made an inquiry into the affairs of the company and, at a meeting of directors, have formed an opinion that-

(a) it is necessary for the company to buy back its own shares;

(b) the company is solvent as at the date of the declaration and the shares buy back would not result in the company being insolvent or its capital being impaired;

(ba) the company will remain solvent after each buy back during the period of six months after the date of the declaration; and

(c) the shares buy back is made in good faith and in the interests of the company.

(a) a company shall be deemed to be solvent if it is able to continue to meet its obligations as and when they become due without any substantial disposition of its assets outside the ordinary course of its business, restructuring its debts, externally forced revisions of its operations or other similar actions;

(b) the capital of a company shall be deemed to be impaired when the value of its assets is less than the aggregate amount of all the shares of the company after the shares buy back.