Patel co ( December 2015)

Hi John, regarding Question 3 (b) the model answer mentioned directors to buy back Gupte’s Shares themselves and not to be cancelled. However this represent money not put into the business.

I don’t understand how it works. Usually, shares buyback will be cancelled afterwards.

Does this mean sharebuy back by Fluffort co and this means the equity will still remain but cash of the company used to purchase shares will decrease? So no cash is actually injected into the co?

I appreciate your time. Thank you