Page 61 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I Sukhpreet Kaur, Lovely Professional University

Notes Unit 3: Reissue of Forfeited Shares and Bonus Issue

CONTENTS
Objectives
Introduction
3.1 Reissue of Forfeited Shares

3.2 Forfeiture and Reissue of Shares in the Case of Over-Subscription and
Pro-rata Allotment
3.3 Right Issue (Under Section 81)
3.4 Right Issue
3.5 Bonus Issue of Shares

3.6 Summary
3.7 Keywords
3.8 Review Questions
3.9 Further Readings

Objectives

After studying this unit, you should be able to:

 Understand reissue of forfeited shares
 Explain forfeitures reissue of shown in over-subscription and pro-rata allotment
 Define right issue
 Explain Bonus shares

Introduction

Forfeiture is withdrawal of shares due to non-payment of any call by the shareholder or for any
other ground as may be provided in the Articles. On forfeiture of shares the member loses the
amount paid thereon and his interest in the ownership of the shares.
Reissue of forfeited shares is a sale of shares and it does not amount to an allotment. The
company should duly record the particulars of the members who acquire those shares as if it
were a transfer of shares. The directors would fix a price for the forfeited share that should not
be lower than the amount of the call(s) due and unpaid on the share at the time of forfeiture.
In the case of a company whose shares are listed in a recognized stock exchange, re-issue of
forfeited shares shall be as per Guidelines for Preferential Issue of the Securities and Exchange
Board of India and the listing agreement.

3.1 Reissue of Forfeited Shares

As per the Articles of Association, directors are empowered to reissue the forfeited shares
when they find it suitable for sale and convenient to them. If there is no provision to reissue
the forfeited shares in the Articles of Association, Table A of Companies Act confers the power
upon them to do so.

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