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After a company buy-back, the Equity Share Capital is reduced by:
AThe buy-back price
BThe market price
CThe nominal value of shares bought back
DThe premium portion
Answer & Solution
Correct answer: C. The nominal value of shares bought back
1. Step 1: On buy-back, equity capital is debited by the nominal/face value of shares bought back.
2. Step 2: Premium portion debits Securities Premium / Free Reserves.
3. Step 3: Hence (B).
_Source: ICAI BoS CA Inter Paper 1, Ch 12 "Buy-Back of Securities"_