What do you mean by forfeiture and reissue of shares?

If shares are forfeited the membership of the shareholder stands cancelled and the shares become the property of the company. Thereafter, the company has an option of selling such forfeited shares. The sale of forfeited shares is called ‘reissue of shares’.

What do you mean by forfeiture of shares?

What Is a Forfeited Share? … When a share is forfeited, the shareholder no longer owes any remaining balance and surrenders any potential capital gain on the shares, which automatically revert back to the ownership of the issuing company.

How are the shares forfeited and reissued give example?

Solved Example For You

The company receives a full subscription. A, a shareholder having 1000 shares fails to pay the allotment and call money until the due date of payment. Consequently, the company forfeits his shares. Later, it re-issues these shares to B for ₹11 per share fully paid up.

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What are the types of reissue of shares?

There are four situations in which re-issue of shares take place.

  • Forfeited shares reissued at discount when originally issued at par.
  • Shares reissued at par or at premium, when originally issued at par.
  • Forfeited shares reissued at par, at discount and at premium when originally issued at premium.

What is forfeiture of shares Class 12?

Forfeiture of shares means cancellation of shares and seizure of the amount received from the defaulting shareholders, whose shares have been forfeited. Upon forfeiture, the name of original shareholder must be removed from the register of members.

What do you mean by forfeiture?

Definition of forfeiture

1 : the act of forfeiting : the loss of property or money because of a breach of a legal obligation assets subject to forfeiture. 2 : something (such as money or property) that is forfeited : penalty.

Why are shares forfeitures?

A share is forfeited when the shareholder fails to pay the subscription money called upon by the issuing company.

When all the forfeited shares are not reissued?

ADVERTISEMENTS: Accounting Entries Regarding Reissue of Forfeited Shares! The forfeited shares can be reissued by the company at any price. 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.

What is the meaning of forfeitures of shares How are shares forfeited can forfeited shares be re issued at discount Give entries for forfeiture and reissue of shares?

Forfeiture of Shares Issued at Discount

When the shares were initially issued at a discount and then forfeited, such a discount must be written off. So an adjustment entry will be passed to give this effect. So the discount applicable on the shares forfeited is written back by crediting the Discount on Issue A/c. Date.

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What entries are made for the forfeiture of shares?

When Forfeiture of shares Issued at Par

The company debits the Share Capital Account with the amount called-up up to the date of forfeiture on shares. It credits the Shares Allotment Amount or Shares Call Account with amount called-up on forfeited shares but due from the shareholders.

What do you mean by deferred shares?

A deferred share is a share that does not have any rights to the assets of a company undergoing bankruptcy until all common and preferred shareholders are paid. … Deferred shares can also be awarded to venture capital and other private investor groups as part of a long-term investment in a company.

What is call in arrears?

Calls-in-Arrears. If some amount, called in respect of a share, is not paid before or on the specific date fixed for payment, such amount which is not paid, is called “Calls-in-arrears”. … In case, any default on account of not paying the call money is known as “ call in arrears ”.

What is forfeiture of shares how does it differ from surrender of shares?

Forfeiture of shares refers to the situation where the allotment of shares is cancelled for the shareholders due to non-payment of any installments. In contrast to that, surrender of shares takes place when shareholders return the shares to the company for cancellation.