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    Question

    In a buyback of shares, which reserve is typically used

    for purchase of own shares in companies law contexts?
    A Capital redemption reserve (if issued bonus before buyback) Correct Answer Incorrect Answer
    B Revaluation reserve directly used always Correct Answer Incorrect Answer
    C Any reserve except free reserves are allowed Correct Answer Incorrect Answer
    D Share premium and free reserves are typical sources Correct Answer Incorrect Answer

    Solution

    As per typical company law provisions, buyback of shares can be financed out of free reserves (retained earnings) and/or the securities premium account.

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