Calculation of Profit on Forfeiture of Shares

To calculate the profit on forfeiture of shares when the reissue share is less than the forfeited shares, the following steps can be followed:

Step 1: Determine the Forfeited Shares
- Identify the number of shares that have been forfeited by the shareholder. This information is usually available in the company's records or the shareholder's agreement.

Step 2: Determine the Reissue Price
- Determine the price at which the forfeited shares will be reissued. This can be based on the prevailing market price or the price set by the company's board of directors.

Step 3: Calculate the Profit on Forfeiture
- The profit on forfeiture is the difference between the reissue price and the nominal value of the forfeited shares.
- The nominal value is the original value of the shares when they were issued.

Step 4: Calculate the Total Profit
- Multiply the profit on forfeiture by the number of forfeited shares to calculate the total profit.
- This will give an indication of the financial gain resulting from the forfeiture and reissuance of the shares.

Example:
- Let's assume 100 shares were forfeited, and the reissue price was set at $10 per share.
- The nominal value of the forfeited shares is $1 per share.
- The profit on forfeiture would be $10 - $1 = $9 per share.
- Therefore, the total profit on forfeiture would be $9 x 100 shares = $900.

Conclusion:
Calculating the profit on the forfeiture of shares involves determining the number of forfeited shares, the reissue price, and the nominal value of the shares. The profit is then calculated as the difference between the reissue price and the nominal value. By multiplying the profit per share by the number of forfeited shares, the total profit on forfeiture can be determined. This calculation provides insights into the financial gain resulting from the forfeiture and reissuance of shares.