If any shareholder is not able to pay the amount of call, the company may exercise the power to forfeit his shares. Discuss the law relating to forfeiture of shares and. A company can forfeit the shares only if it is authorized by its articles. The directors of the company are empowered to reissue the forfeited shares if authorized by its articles. The main difference between forfeiture and surrender of shares are as follow. Reissue of shares 6 iii subscribed share capital iv calledup share capital v paidup share capital vi reserve share capital. According to section 75 1 of the companies act, 1956, a company is required to file a return of allotment of shares and not forreissued of forfeited shares. Our notes and mcq test series are now available on app anurag classes download our app anurag classes from. If a shareholder fails to pay allotment money or a call or. Such shares may be reissued at par, at a premium or even at a discount. Oct 18, 2015 issue, forfeiture and re issue of shares by n.
Reserve capital is different from capital reserve, capital reserves are part of reserves and surplus and refer to those reserves which are not available for declaration of dividend. Forfeiture and reissue of shares in the case of oversubscription and. Reissue of forfeited shares accounts class 12 notes. Sometimes on nonpayment of call money, we see forfeiture and reissue of shares. The forfeited shares can be reissued by the company at any price. The following procedure must be followed for forfeiture of shares. The fixed value of a share is printed on the share certificate and is called nominal par face value of a share. Give necessary journal entries regarding forfeiture and reissue of shares. It also contains solved questions for the better grasp of the subject in an easy to download pdf file and will help you score more marks in board exams.
Liabilities assets share capital 100 bank 120 reserves and surplus share premium 20 120 120 shares issued at discount. Feb 12, 2017 for more online classes please visit for face to face classes please contact bliss point studies, 2453 hudson lane, near gtb nagar metro station, next to delhi university. Requirements may include paying an allotment or call money. But, the company can forfeit shares only if the article of association of the company allow forfeiture. Being share forfeited account transferred b reissue of forfeited shares originally issued at discount if the shares which were originally issued at a discount are forfeited and reissued, then on reissue the new allottee would get the advantage of discount, besides getting some additional discount from share forfeited account. Introduction to issue forfeiture and reissue of shares preferred. Reissue of forfeited shares is not allotment of shares but fundamentals of accounting. Forfeiture of shares is the action taken by a company to cancel the shares. Forfeiture of shares is a process of withdrawing the shares allotted and seizing the amount already paid by the defaulters. This pdf file for class 12 accounts subjects reissue of forfeited shares topic contains brief and concise notes for easy understanding of topics.
If the fails to pay the calls then his shares may be forfeiture by the directors if authorised by the articles of association of the company. Issueforfeiture and reissue of shares issueforfeiture and. Icai mp3 podcast cpt accounting forfeiture and reissue of. This pdf file for class 12 accounts subjects reissue of forfeited shares topic contains brief and concise notes for easy understanding of topics and quick learning. But in no case, the amount collected on the reissue of such shares plus the amount already forfeited be less than the amount credited as paid upon reissue of shares. Issue and forfeiture and reissued of shares free download as powerpoint presentation. A forfeited share may be sold or otherwise disposed of, on such terms and in such manner as the board thinks fit. Solved illustrations on forfeiture and reissue of shares. Issue forfeiture of shares financial capital capital. This article aims to outline the process of forfeiture of shares as well as the main circumstances surrounding the forfeiture. When a shareholder fails to pay calls, the company, if empowered by its articles, may forfeit the shares. May, 2015 forfeiture of shares issued at a discount. When shares are reissued, return of the forfeited shares need not be filed under section 75 1 of the companies act, 1956.
Scribd is the worlds largest social reading and publishing site. Forfeiture of shares and its effects an analysis ipleaders. Forfeiture of share means the cancellation of the shares for nonpayment of calls due. The directors then forfeited these shares and reissued 1,000 shares, as fully paid, for rs. This cannot happen because the board of directors has the power to cancel the forfeiture only before the disposal or reissue of shares as per regulation 312 of table f, schedule i of companies act, 20. Accounting entries regarding reissue of forfeited shares. Issue and forfeiture and reissued of shares preferred stock. In this article we will discuss about the forfeiture and reissue of shares. Shares are forfeited, the title of such shareholder is extinguished but the amount paid is not refunded to him.
The board of directors of the company is empowered to reissue the forfeited shares if authorized by its articles. The procedure for the forfeiture of shares is likely to be different depending on the reason for forfeiture arising and what the articles state. Forfeiture and reissue of shares for b com class 2 youtube. Forfetire and reissue of shares 10 note a public limited company cannot make any allotment of shares unless the amount of minimum subscription stated in the prospectus has been subscribed and the sum payable as application money for such shares has been paid to and received by the company. Shares may be forfeited if call is not paid within the stipulated time. New share issue share rights issue forfeiture and reissue of shares payment of dividends each question is independent of the other questions. The conditions of forfeiture of shares are forfeiture of shares issued at par, forfeiture of shares issued at discount and forfeiture of shares issued at premium. To share capital ac being forfeited shares reissued at par b reissue at premium. Introduction to issue forfeiture and reissue of shares free download as pdf file. Reissue of forfeited shares accounting entries your article library.
Failure to pay call money results in forfeiture of shares. According to section 284 of the companies act, 20 share means a share in the share capital of a company and includes stock. Issuance or forfeiture of securities, split or consolidation of shares, buyback of securities, any restriction on transferability of securities or alteration in terms or structure of existing securities including forfeiture, reissue of forfeited securities, alteration of calls, redemption of securities etc. Difference between forfeiture and surrender of shares.
Reissue of forfeited shares accounts class 12 notes, ebook free. Forfeiture of shares conditions procedure annulment. Issue forfeiture of shares financial capital capital surplus. Ts grewal accountancy class 12 solutions chapter 8 accounting.
The forfeiture of shares does not amount to reduction of share capital since at any time, the board of directors are having the power to reissue the forfeited subject to the articles of association and none of modes of the reduction of capital as per section 100 of companies act, 1956 is applicable to the forfeiture of shares. Asset forfeiture policy manual, a compilation of policies governing the department of justice asset forfeiture program program. A forfeited share may be sold or otherwise disposed of. Forfeiture of shares debits and credits financial economics. Compliance calendar seeks to provide research based blogsarticles and experts views on various critical topics and burning issues completely free with zero subscription cost while at the same time, we insist on providing uptodate information to our corporate fraternity and professionals like cscacmalawyers, students and the layman. Jun 28, 20 28 june 20 reissuedisposal of forfeited shares. The loss of any property without compensation as a result of defaulting on contractual obligations, or as a penalty for an illegal conduct. Share market nifty share market dr vivek bindra duration.
To discount on issue of shares ac to unpaid calls ac to shares forfeited ac 11. Any director or any person who is an associate of a director may paricipate in any issue by the company of securities. For this reason, the forfeiture or shares is most likely to be carried out by public limited companies rather than by private companies. Forfeiture and reissue of shares by becoming a shareholder a person enters into a contract with the company that he is liable to pay full price of the share to the company from time to time and as and when the calls are made by the company if he fails to comply the company can forfeit his shares forfeiting. Introduction to forfeiture and reissue of shares 2. The title of the purchaser to the forfeited shares is not affected by any irregularity or invalidity in the forfeiture or sale of the shares. Call money was received in full, except from the above persons. If applicants fail to pay the allotment amount and the shareholders fail to pay the call money, then the company can forfeit such shares.
You can view them online or download pdf file for future use. Pdf corporate accounting i kabir tahir hamid academia. If a member fails to pay a valid call within the stipulated time, the company may sue him for recovery of the amount of the call after waiting for a reasonable period or may forfeit the shares for nonpayment of any call or installment of a call. Journal entries on forfeiture or surrender and reissue of shares 3. Issue forfeiture of shares free download as powerpoint presentation. Not all of these areas have been covered in the equity topic in accounting method ii. Regarding reissue of forfeited shares accounting entries. The ownership of a company is broken into units we know as shares. These shares represent a part of the company, so the shareholder becomes a part owner. The secretary shall prepare a list of defaulters i. Call money is minimum 5% shortterm finance repayable on demand, with a maturity period of one to fourteen days or overnight to a fortnight.
If a shareholder fails in their obligations then they could lose their entitlement to the shares they own. Forfeiture of shares problems and solutions accountancy. Practice questions issue, forfeiture, reissue and valuation of rights 1. From the following particulars, journalise the transactions for third call, forfeiture and reissue of shares. Secretarial standard on forfeiture of shares the following is the text of the secretarial standard9 ss9 issued by the council of the institute of company secretaries of india, on forfeiture of shares. Introduction of issue forfeiture and reissue of shares. Make the journal entries including that of cash necessary to record transactions of final call, forfeiture of shares and reissue of forfeited shares. Find powerpoint presentations and slides using the power of, find free presentations research about forfeiture of shares ppt. The re issue of forfeited shares is treated as re sale and not the allotment, and therefore, no return of allotment of re issue of forfeited shares need be filed with the registrar of companies. Forfeiture of shares means cancellation of shares due to nonpayment of allotment money or call money within a specified period. Dec 07, 2016 classxii accounts all videos, notes and test mcqs available on our mobile app.
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