§ 3178 Association Stock Purchase Limits

• •A group (like a club or company) can buy back its own shares, but only if it doesn’t owe too much money.
• •The group can’t buy shares if its debts are more than half of what it owns.
• •The group decides the price of the shares, and it must pay cash within a year.

Imagine a small company that makes toys. The company has $100,000 in stuff it owns (like machines and toys) and owes $40,000 in loans.

The company can buy back its own shares because it doesn’t owe more than half of what it owns ($40,000 is less than $50,000). The company’s leaders decide the price of the shares and must pay cash for them within a year.