A Ltd forfeited 100 shares of 10 each fully called up for non payment ...
Forfeiture of Shares:
When a shareholder fails to pay the due amount on the shares allotted to them, the company reserves the right to forfeit such shares. The shares are then cancelled, and the shareholder loses all the rights attached to them.
Forfeiture of Shares by A Ltd:
In the given scenario, A Ltd forfeited 100 shares of 10 each fully called up due to non-payment of the first call of 3 and the second and final call of 3 per share.
Re-Issue of Forfeited Shares:
After the forfeiture of shares, the company can either hold the shares as treasury shares or re-issue them to new shareholders. In this case, A Ltd decided to re-issue the forfeited shares.
Fully Paid Shares:
The forfeited shares were re-issued as fully paid shares for 10 per share. This means that the new shareholders did not have to pay any additional amount to acquire the shares.
Advantages of Re-Issuing Forfeited Shares:
Re-issuing forfeited shares can have several advantages for the company, including:
- Generating additional funds for the company
- Preventing dilution of ownership
- Increasing the liquidity of the company's shares
- Improving the company's financial ratios
Conclusion:
In conclusion, A Ltd forfeited 100 shares due to non-payment of calls and re-issued them as fully paid shares. Re-issuing forfeited shares can have several advantages for the company, and it is a common practice followed by many companies.