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Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.?
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Mr. C, who was the holder of 10,000 preference shares of ` 100 each, o...
Forfeiture and Reissue of Shares
Forfeiture of Shares:
When a shareholder fails to pay the amount due on shares, the company can forfeit those shares. Forfeiture means the cancellation of shares and the shareholder loses all the rights attached to those shares.
Reissue of Forfeited Shares:
The forfeited shares can be reissued by the company after fulfilling the legal formalities. The reissued shares can be sold at any price, but the amount received on reissue must be credited to the shareholder's account.
Illustration with Calculation:
In the given case, Mr. C failed to pay the dues on allotment and first call. Thus, the directors forfeited his 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up.
The amount received on forfeiture is calculated as follows:
Amount received on forfeiture = Number of forfeited shares x Amount called up
= 10,000 x ` 70
= ` 7,00,000
The reissued shares were sold to Mr. D at ` 60 per share paid-up as ` 70 per share. Thus, the amount received on reissue is calculated as follows:
Amount received on reissue = Number of reissued shares x Issue price
= 8,000 x ` 60
= ` 4,80,000
Therefore, the excess amount received on reissue is ` 4,80,000 - ` 7,00,000 = ` 2,20,000. This excess amount is transferred to the capital reserve account.
Conclusion:
Forfeiture and reissue of shares are legal procedures that ensure the proper management of a company's share capital. These procedures can be used by companies to recover the amount due on shares and to reissue them to new shareholders.
Forfeiture of Shares:
When a shareholder fails to pay the amount due on shares, the company can forfeit those shares. Forfeiture means the cancellation of shares and the shareholder loses all the rights attached to those shares.
Reissue of Forfeited Shares:
The forfeited shares can be reissued by the company after fulfilling the legal formalities. The reissued shares can be sold at any price, but the amount received on reissue must be credited to the shareholder's account.
Illustration with Calculation:
In the given case, Mr. C failed to pay the dues on allotment and first call. Thus, the directors forfeited his 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up.
The amount received on forfeiture is calculated as follows:
Amount received on forfeiture = Number of forfeited shares x Amount called up
= 10,000 x ` 70
= ` 7,00,000
The reissued shares were sold to Mr. D at ` 60 per share paid-up as ` 70 per share. Thus, the amount received on reissue is calculated as follows:
Amount received on reissue = Number of reissued shares x Issue price
= 8,000 x ` 60
= ` 4,80,000
Therefore, the excess amount received on reissue is ` 4,80,000 - ` 7,00,000 = ` 2,20,000. This excess amount is transferred to the capital reserve account.
Conclusion:
Forfeiture and reissue of shares are legal procedures that ensure the proper management of a company's share capital. These procedures can be used by companies to recover the amount due on shares and to reissue them to new shareholders.
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Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.?
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Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.?.
Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.?.
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Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.?, a detailed solution for Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.? has been provided alongside types of Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per share has been called up, could not pay his dues on Allotment and First call each at ` 20 per share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D at ` 60 per share paid-up as ` 70 per share.? theory, EduRev gives you an
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