SARASWATI INSTITUTE

(The School of Commerce)

ACCOUNTING
(Company)
By. Sukesh Sir
class-xii

Address: College Square , Ctc (In front of Ravenshaw University

Contact: Sukesh Sir -(8093390691)
Office -(8658570258)
(For more details, visit our website: http://saraswatiinstitutecuttack.com)

1 SARASWATI INSTITUTE,College sq,ctc, cont:8093390691 (Sukesh Sir)

 COMPANY ACCOUNT
MEANING:
POINTS TO REMEMBER
A company is a voluntary association of persons who contribute money
➢ Meaning or money’s worth to a common stock for some common purpose.
❖Definition
Definition: - Section 2(20) of the Companies Act, 2013 defines the term
❖Features
‘company’ as “a company incorporated under this Act or any previous
❖Kinds of company company law.”
❖Shares According to L.H Haney, “A company is an artificial person created by
law, having a separate legal entity, with a perpetual succession and a
❖Share Capital
common seal”.
❖Accounting entries
❖Calls-in Arear Characteristics of Company:-
❖Calls –in-Advance a) Incorporated, voluntary and autonomous association
b) Separate legal existence
c) Perpetual succession
d) Common Seal
e) Limited liability
f) Transferability of shares
g) Separation of management from ownership

Incorporated, voluntary and autonomous association:- A joint stock company is an incorporated ,

voluntary and autonomous association of many persons. The company comes into existence through a legal
process, i.e. registration under the Companies Act. It is a voluntary as well as autonomous association which
means self-governing or self-controlling body.

Separate legal existence:- A Company is an artificial legal person and its entity is distrnct and separate from
its members . It is capable of entering into contracts, can file a suit against any person and can be sued in the
court of law. It can purchase and sell the properties, can also open a bank account in its own name.

Perpetual Succession:- The life of a company is not affected by the death , retirement or insolvency of
shareholders or directors. Shareholders may come and shareholders may go, but the company continues for ever,
unless the life of the company is terminated by some legal process under the Companies Act.

Common Seal:- The company has a common seal. Since the company has no physical existence, it can act only
through natural persons called directors. All documents prepared by the directors must bear the seal of the
company. The common seal is used as substitute for the signature of the company.

Limited liability:- The liability of a shareholder is limited to the unpaid value of the shares he owns. The
liability of a shareholder is extinguished on payment of the issue price of his shareholdings.

Transferability of shares:- The share of a company is freely transferable. Whenever the shareholders want
to dispose of the shares, they can do so by following the procedure devised for the purpose. But private companies
restrict the rights of members to transfer their shares in the company.

Separation of management from ownership:- Shareholders are the real owners of a company , But as the
number of shareholders is very large, neither it is possible nor desirable for each member to participate in the
management of the company. Thus, a company is managed by Board of Directors who are elected representatives
of the shareholders.
2 SARASWATI INSTITUTE,College sq,ctc, cont:8093390691 (Sukesh Sir)
 Types of companies

On the basis of On the basis of On the basis of Other Companies

incorporation Liability Control

* Chartered Company * Govt Co * OPC (One Person Company)

* Statutory Company Limited Co. Unlimited Co * Holding Co. *Small Company
* Registered Company * Subsidiary Co * Dormant Company
* Associate Co. * Foreign Company
Limited by Share Capital Limited by Guarantee

Private Co. Public Co.

Listed Co. Unlisted Co

A. On the basis of incorporation

a) Registered companies
b) Statutory Companies
c) Chartered Company

Registered companies:- Registered companies are those companies which are formed and registered under the
Companies Act, 2013 or any previous company law. These companies are governed by the provisions of the
Companies Act, 2013

Statutory Companies:- Statutory companies are formed by the special Act passed by the central or state
legislature. The objects , powers, rights and responsibilities of these companies are defined in such special Acts.
These companies are formed mainly with an intention to provide the public services. Examples of statutory
companies are, Reserve Bank of India, Life Insurance Corporation of India, etc.

Chartered Company:-

B. On the basis of liability

a) Companies limited by shares
b) Companies limited by guarantee
c) Unlimited liability companies

Companies limited by shares:- A company limited by shares is a company in which liability of the members or
shareholders is limited only to the extent of amount unpaid on the shares held by them. As soon as the full amount
of the share is paid, the member becomes free from his liability. Such companies are also known as ‘Limited liability
companies and their name contains the word ‘Limited’ at the end.

Companies limited by guarantee:- A company limited by guarantee is one in which the liability of the members
is limited to such amount as he undertakes to contribute towards the assets in the event of winding up of the
company. These companies may or may not have share capital. If a company has share capital , then the liability of
the members is firstly limited to the extent of unpaid amount on shares held by them and secondly, in the event of
winding up , to the next extent of guarantee given by them, .

3 SARASWATI INSTITUTE,College sq,ctc, cont:8093390691 (Sukesh Sir)

Unlimited liability companies:-An unlimited company is the one in which liability of the members is unlimited
i.e., all the members are personally liable for the entire amount of the company’s debts.

Private limited company: As per section 2 (68) of Companies Act, 2013 , a private company means a company
having a minimum paid up share capital of one lakh rupees or such higher paid up share capital as may be
prescribed and which by its Articles of Association. Private companies have some restrictions such as
i) Restricts the right of the members to transfer its shares,
ii) Limits the number of its members to 200 excluding the present and past employee members except in case
of one person company,
iii) Prohibits any invitation to the public to subscribe for any securities of the company, i.e shares or
debentures of the company. The minimum number of its members is two except in case of one person
company. The name of a private company must end with two words,” private limited”

Public limited Company: As per section 2(71) of the Companies Act , 2013, a public company is one which
i) Is not a private company,
ii) Is a private company, which is a subsidiary of a company, which is not a private company,
iii) Has a minimum paid up capital of five lakh rupees or such higher paid up capital as may be prescribed.
A public company must have a minimum of seven members .there is No 3 restrictions prescribed for Private
company.

C. On the basis of Control

a) Govt Company
b) Holding Company
c) Subsidiary Company
d) Associate Company

Government Company:-
It is a company in which at least 51% of the share capital is held by the Central Government or by any State
Government or Governments or partly by the Central Government and partly by one or more State Governments.
Steel Authority of India Ltd. Is an example of Govt. Company.

Holding Company: A holding company which controls the composition of the Board of Directors of another
company and it holds more than one-half of the total share capital (equity share capital+ convertible preference
share capital) either on its own or together with any of its subsidiary companies . Thus a holding company can
control the policies of another company in which it holds majority of share capital.

Subsidiary Company: A subsidiary company is a company which is controlled by a holding company . In other
words, if a company controls the composition of Board of Directors of another company and it holds more than
50% of the total share capital (equity share capital+ convertible preference share capital) of such company, the
company so controlled is known as subsidiary company.

Associate Company: If a company holds 20% or more but less than 50% of the share capital of another company,
then the latter company will be the associate company of the former company.

D. Other kinds of companies

a) Small Company
b) Dormant Company
c) Foreign Company
d) OPC (One Person Company)

4 SARASWATI INSTITUTE,College sq,ctc, cont:8093390691 (Sukesh Sir)

Small Company:- As per the Companies Act, 2013 a small company means , other than a public company, whose
paid up capital does not exceed Rs 50 lakhs or such higher paid up capital as may be prescribed , or turnover of
which as per its last statement of profit and loss does not exceed Rs 2 crores or such higher amount as may be
prescribed .

Dormant Company: A dormant company is a company which is formed and registered under the Companies Act,
2013 for a future project or to hold an asset or intellectual property and has no significant accounting transactions
during last two financial years.

Foreign Companies:-
Foreign company means a company which is incorporated outside India and has a place of business in India
whether by itself or through an agent physically or through electronic mode and conducts any business activity in
India in any other manner.

One person Company (OPC):- One person company means a private limited company with only one person as its
member. Only a natural person who is an Indian citizen and resident in India can be a member of One person
Company. Resident in India means a person who has stayed in India for a period of not less than 182 days
immediately preceeding one calendar year. The name of OPC shall include the word ‘One Person Company’ between
the brackets below the name of the company.

SHARES
Meaning and Definition of Shares:
The capital of a company is usually divided into units of small denomination. Each unit is called a ‘share’.

Types of Shares:-
a) Equity shares
b) Preference shares

Equity Shares:- Equity shares are those shares which are not preference shares. The equity shareholders are the
real owners of the company and control the affairs of the company . They have voting rights in the meetings of the
company. As regards return of capital , equity shareholders get back their capital only when preference
shareholders get their capital in full.

Preference Shares:- Preference shares carry preferential rights as regards payment of dividend and repayment
of capital . In other words, preferential shares are those shares which carry the following rights:
a) They have a preferential right to receive dividend at a specified rate before any dividend is paid to the equity
shareholders
b) They have a preferential right to return of capital before the capital of equity shareholders is returned when
the company goes into liquidation.
Preference share holders generally do not possess voting right. However , they can vote if their own interests are
affected.

Types of Preference shares:-

1. Cumulative Preference shares
2. Non-Cumulative Preference Shares
3. Participating Preference Shares

5 SARASWATI INSTITUTE,College sq,ctc, cont:8093390691 (Sukesh Sir)

 4. Non-Participating Preference Shares
5. Redeemable Preference Shares
6. Irredeemable Preference Shares
7. Convertible Preference Shares
8. Non-Convertible Preference Shares

Cumulative Preference Shares:- Cumulative preference shares are those shares, the holders of which have a right
to receive the arrears of dividend before any dividend is paid to equity shareholders. If any year, the profits of the
company are insufficient to pay dividend to such preference shareholders , the dividend keeps on accumulating till
it is fully paid. This means all arrears of dividend must be paid as soon as the company makes any profit available
for dividend.

Non-Cumulative Preference Shares:- Non-cumulative preference shares are those shares, the holders of which
are not entitled to get arrear dividends out of the profits of subsequent years. If no dividend is declared in any year
due to any reason, such shareholders get nothing and they cannot claim such arrear dividends in any subsequent
year.

Participating Preference Shares:- Participating preference shares are those shares, the holders of which are
entitled to get a share in the surplus profits left over after paying dividend to equity shareholders at a particular
rate, in addition to preference dividend at a fixed rate . These shareholders are also allowed to get a share in surplus
assets of the company at the time of winding up after paying back both the preference and equity shareholders.

Non-Participating Preference Shares:- Non-Participating preference shares are those shares, the holders of
which are entitled to get a fixed rate of dividend only every year and do not have any right to share the surplus left
over after paying equity shareholders.

Redeemable Preference Shares:- Redeemable preference shares are those shares , the holders of which will be
repaid their capital by the company within a stipulated period in accordance with the terms of issue and the
fulfillment of certain conditions laid down in section 55 of the Companies Act 2013.

Irredeemable Preference shares:- Irredeemable preference shares are those shares , the orders of which are not
paid back their amount of capital before the winding up of the company . These shares are non- refundable to the
holders during the life time of the company.

Convertible Preference Shares:- Convertible preference shares are those shares, the holders of which are given
the right to convert their holdings into equity shares at the option of the holders of such shares, within a specified
period.

Non-Convertible Preference Shares:- Non-Convertible Preference shares are those shares, the holders of which
do not have the right to convert their holdings into equity shares.

Differences between Preference Shares and Equity Shares

Basis Preference Shares Equity Shares
1. Payment of Dividend Dividend is paid on Preference shares Dividend is paid on equity shares if
before payment of dividend on equity there is a balance of profit after
shares payment of dividend on preference
shares.
2. Rate of Dividend Rate of dividend on preference shares The rate of dividend on equity
is fixed. shares is not fixed . It varies from
year to year depending upon the
availability of profits.

6 SARASWATI INSTITUTE,College sq,ctc, cont:8093390691 (Sukesh Sir)

 3. Arrears of Dividend Dividend on cumulative preference Dividend on equity shares is not
shares is accumulated in case of non- accumulated in case of non-
payment of dividend for any year. payment of dividend for any year.
4. Return of capital on winding up Preference capital is to be refunded Equity share capital is refunded if a
before refund of equity share capital balance remains after refund of
on liquidation of the company. preference capital on liquidation of
the company.
5. Voting right Voting right of preference Equity shareholders enjoy voting
shareholders are generally restricted rights.
and they can vote only on special
circumstances.
6. Right to participate in Preference shareholders do not have The equity shareholders have the
management a right to participate is management right to participate in management.
of the company. But they can interfere
when the management does injustice
to them.
7. Redemption Preference shares are to be redeemed Equity shares are not generally
within a maximum period of 20 years redeemed except under a scheme of
from the date of issue except in capital reduction.
infrastructural companies where
such shares can be redeemed within
30 years.
8. Convertibility Preference shares can be converted Equity shares are not convertible.
into equity shares, if terms of issue so
provide.

SHARE CAPITAL
Meaning:-
A joint stock company should have capital in order to finance its activities. It raises capital by issue of
shares. When the total capital of a company is divided into shares, then it is called share capital. In other
words, the capital collected by a joint stock company for its business operation is known as ‘share capital
‘.
Capital Structure

Authorized Share Capital

Issued Share Capital Un-issued share Capital

Subscribed Un-subscribed
Share capital Share Capital

Called-up Un-called
Share Capital Share Capital/Reserve Capital

Paid-up Share Calls-in-Arrear

Capital

7 SARASWATI INSTITUTE,College sq,ctc, cont:8093390691 (Sukesh Sir)

Types of share capital:-
1. Authorised/Registered/Nominal Capital
2. Issued Capital
3. Subscribed Capital
4. Called up Capital
5. Uncalled Capital
6. Paid up capital
7. Reserve Capital

Autorised/Registered /Nominal Capital:- Authorised capital is the maximum amount of capital for
which a company is authorized to raise by issue of shares. The amount of such capital is mentioned in the
Memorandum of Association . Such share capital must be registered with the Registrar of Companies at
the time of incorporation.

Issued Capital:- Issued capital is that part of authorized capital which is actually offered for public
subscription.
Unissued share capital:-
The remaining part of authorized capital which is not issued to the public is known as ‘unissued capital’
which may be issued in future.

Subscribed Capital:- Subscribed Capital is that part of issued capital which is subscribed by the public.
The shares issued by a company for public subscription may not be applied for in full by the public.

Called up Capital:- Called up capital is that part of subscribed capital which has been called up for
payment by the directors from shareholders. The portion of the issue price of the shares which the
shareholders are called upon to pay is known as called up capital.

Uncalled capital:- Uncalled capital is that part of subscribed capital which is not called up by the
company. The company may call this amount as and when required.

Paid up Capital:- The paid up capital is that portion of called up capital which is actually received from
the shareholders. Usually the called up capital and the paid up capital are the same except where some
shareholders fail to pay the amount called up. Such an amount is called ‘calls-in-arrear.’

Reserve Capital: - An unlimited company having a share capital while converting into a limited company
may have reserve capital. In such a case, the company by a resolution may increase the nominal amount
of its share capital by increasing the nominal amount of each of its shares, and determine that no part of
its increased capital shall be called up except in the event of winding up of the company.

DIFFERENT WAYS FOR ISSUE OF SHARES:-

1. Issue of shares for cash by public subscription and payable in installments
2. Issue of shares for cash by public subscription and payable in lump sum
3. Issue of shares for cash by private placement
4. Issue of shares for consideration other than cash

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Issue of shares for cash by public subscription and payable in installments:- Public limited companies
raise share capital by issuing shares for public subscription . Usually total issue price of a share is payable
in different installments.
Journal Entries for Issue of Shares
a) When application money is received.

Bank A/c Dr. (with the amount of application

money on shares allotted)
To Share Application A/c
(Being the application money received on………
Shares @ Rs ……per share)

b) When allotment is made:

i) For transfer of application money-
Share Application A/c Dr. (With the amount of application
money on shares allotted)
To Share Capital A/c
(Being transfer of application money to Share
Capital A/c on allotment of …shares.)

ii) For allotment money becoming due-

Share Allotment A/c Dr. (with the amount of allotment
Money due on shares allotted.)
To Share Capital A/c
(Being allotment money @ Rs… per share due on …shares.)
iii) For refund of excess application money-
Share Application A/c Dr. (with the amount of excess application
Money refunded)
To Bank A/c
(Being excess application money refunded).
iv) For adjustment of excess application money towards allotment-
Share Application A/c Dr. (with the excess application money
Adjusted against allotment.)
To Share Allotment A/c
(Being excess application money adjusted towards allotment)

v) For receipt of allotment money-

Bank A/c Dr. (with the amount of allotment money
received)

To Share Allotment A/c

(Being allotment money received on…shares @ Rs…per share)
c) When the first call is made:
i) For first call money becoming due-
Share First Call A/c Dr. (with the amount of first call money due)

9 SARASWATI INSTITUTE,College sq,ctc, cont:8093390691 (Sukesh Sir)

 To Share Capital A/c
(Being first call money due on shares @ Rs…. Per share)
ii) For receipt of First Call money-
Bank A/c Dr. (with the amount of first call money
received)
To Share First Call A/c
(Being first call money due on shares received)

d) When the second and final call is made:

i) For second and final call money becoming due-
Share Second and final call A/c Dr. ( with the amount of second and final call
money due)
To Share Capital A/c
(Being the second and final call money due on ……shares @Rs ….per share.)

ii) For receipt of second and final call money-

Bank A/c Dr. (with the amount received on second and
final call)
To Share Second and Final call A/c
(Being the second and final call money received on …shares)

Terms of Issue of Shares:-

a) Issue of Shares at par,
b) Issue of shares at a premium , and
c) Issue of shares at a discount
(Section 53 of Companies Act, 2013 prohibits issue of shares at a discount except on Sweat Equity Shares.)

Issue of Shares at Par:- When shares are issued at a price equal to the face value or nominal value of shares, it is
known as shares issued at par. If the face value or nominal value of shares of a company is Rs 10 and such shares are
issued at Rs 10 each, the shares are said to have been issued at par.

Issue of Shares at a Premium:- When shares are issued at a price more than the face value or nominal value of shares ,
it is said to be issued at a premium . If the face value or nominal value of shares of a company is Rs 10 and such shares
are issued at Rs. 12 per share , the shares are said to have been issued at a premium, the premium amount being Rs 2
per share.

Utilisation of securities premium:-

i) In writing off the preliminary expenses of the company, or
ii) In writing off the expenses, commission, discount allowed on issue of shares or debentures of the company, or
iii) For issuing fully paid up bonus shares to the shareholders of the company, or
iv) For providing for the premium payable on redemption of redeemable preference shares or debentures of the
company, or
v) For buy back of company’s own shares and other securities as per section 68.

10 SARASWATI INSTITUTE,College sq,ctc, cont:8093390691 (Sukesh Sir)

 Accounting Entries for the amount of Securities Premium:

a) When securities Premium is payable with application money:

i) On receipt of application money
Bank A/c Dr. (with application money received
including premium)
To Share Application A/c
(Being application money received on shares @ Rs .. per share including Rs.. per shares as premium)

ii) On transfer of Share Application A/c on allotment –

Share Application A/c Dr. (With application money received
including premium)
To Share Capital A/c (with application money payable towards
share capital)
To Securities Premium A/c (With application money payable
Towards premium)
(Being transfer of application money to Share Capital A/c and Securities Premium A/c)
b) When securities premium is payable with allotment money:
i) On allotment money becoming due-
Share Allotment A/c Dr. (With allotment money due including
premium)
To Share Capital A/c (With allotment money due towards
share capital )
To Securities Premium A/c (With allotment money due towards
premium)
(Being Allotment money due on shares @ Rs …. Per share
towards capital and Rs …. Per share towards premium)

ii) On receipt of allotment money

Bank A/c Dr. (with the amount of allotment money
received including premium)
To Share Allotment A/c
(Being allotment money received including premium on …. Shares @ Rs … per share.)

c) When Securities Premium is payable with call money:

i) On call money becoming due-
Share Call A/c Dr. (with call money due including premium)
To Share Capital A/c (With call money due towards share capital)
To Securities Premium A/c (With the amount call money received
including premium)
(Being call money due on ----shares@ Rs… per share towards capital and Rs … per share for premium)

11 SARASWATI INSTITUTE,College sq,ctc, cont:8093390691 (Sukesh Sir)

 ii) On receipt of call money-
Bank A/c Dr. (with the amount call money received
including premium)
To Share Call A/c
(Being call money received including premium on ---- shares @ Rs … per share)

Issue of shares at a Discount:-

When shares are issued at a price less than the face value or nominal value of shares, it is said to be issued at a
discount. If the face value or nominal value of shares of a company is Rs 10 and the shares are issued at Rs 9 per share,
the shares are said to have been issued at a discount, the discount being Rs 1 per share.

Accounting Entries on shares issued at a discount:-

a) For allotment money due-
Share Allotment A/c Dr. (With the amount due on allotment )
Discount on Issue of Shares A/c Dr. (With the amount of discount )
To Share Capital A/c (With the total amount)
(Being the allotment money due on –shares
of Rs… per share , discount being Rs …per share.)
b) For allotment money received-
Bank A/c Dr. (with the amount of allotment money
received)
To Share Allotment A/c
(Being allotment money received on --- shares @ Rs … per share.)

Prohibition on Issue of Shares at a discount:

As per section 53 the Companies Act, 2013 companies are prohibited to issue shares at a discount. The only shares that
could be, issued at a discount are “Sweat Equity Shares” as per section 54 of the Companies Act, 2013. In other words ,
any share issued by a company at a discount except sweat equity share, shall be void.

Calls-in-Arrear:-
If a shareholder fails to pay the amounts due on allotment or calls within a specified period, the amount not so paid by
the shareholder, is called ‘calls-in-arrear.’ There are two methods to deal with calls-in-arrear.
Interest on Calls-in-Arrear:-
According to Table F, interest shall be charged at a rate not exceeding 10% p.a .

Call-in Advance:-
If a shareholder pays in excess of what has been called up, the excess amount so received by the company, is called
‘Calls-in –Advance’. The amount so received is credited to call-in-Advance A/c.
Interest on Calls-in-Advance
If the articles of Association do not specify such rate of interest , provisions in the Table F of Schedule I of the
Companies Act, 2013 shall be applicable which leaves the matter to the Board of Directors, subject to a maximum rate
of 12% p.a.

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 Distinction Between Calls-in –Arrear and calls –in-Advance
Basis Calls-in-Arrear Calls-in-Advance
1. Meaning The amount which is not paid by the The amount which is paid by the
shareholders in respect of any call shareholders for any call not yet
which is called up by the company , made by the company, is known as
is known as calls-in-arrear calls-in-advance.
2. Interest Interest is charged on Calls-in-Arrear Interest is allowed on Calls-in-
Advance
3. Rate of Interest Interest is charged (Subject to a Interest is allowed (subject to a
maximum rate of 10% p.a) as per maximum rate of 12% p.a ) as per
Table F, if Articles are silent. Table F, if Articles are silent.
4. Disclosure in the Balance Sheet Amount of calls –in-arrear is shown Amount of calls –in-advance is
in the Balance Sheet by way of shown separately on Equity and
deduction from the called up capital Liabilities side of the Balance Sheet
on Equity and Liabilities side. under the main head ‘Current
Liabilities ‘ and Sub –head ‘Other
Current Liabilities.’

Under –Subscription of Shares

If the number of shares applied for by the public is less than the number of shares offered by the company, the issue is
said to be under-subscribed. For example, a company invites applications from the public for 50,000 Equity shares and
the public applied for 40,000 Equity shares. It is a case of under -subscription of the issue.

Over-Subscription of Shares
If the number of shares applied for by the public is more than the number of shares offered by the company, the issue
is said to be over-subscribed. For example, a company invites applications from the public for issue 50,000 Equity
Shares and the public applied for 60,000 equity Shares.

Pro-rata Allotment:
Pro-rata allotment of shares means that all the applicants are allotted shares on proportionate basis. It means shares
are allotted in the ratio which the total number of shares to be allotted bears to the total number of shares applied for.
For example , if a company allots 10,000 shares to the applicants for 15,000 shares , it is a case of pro rata allotment in
the ratio of 10,000:15,000, i.e 2:3.

Issue of Shares for Cash by Public Subscription and payable in lump sum
When a company issues shares for which the consideration is payable in one installment instead of in ‘different
installments’ such as, share application, share allotment, etc. the issue price of share is payable in lump sum along with
application.
Issue of Shares for Cash by Private Placement
Sometimes a public limited company is confident of raising capital through private sources. In such a case, the
company does not invite public for subscription of shares . It makes private placement of shares to a selected group of
persons or institutional investors. Private placement of shares implies the issue of shares to a selected group of
persons.

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Issue of Shares for Consideration other than Cash
Sometimes shares are issued by a company for consideration other than cash, such as issue of shares to vendors for
purchase of assets or purchase of a business or issue of shares to promoters or issue of shares to underwriters or any
other persons for their services.

FORFEITURE OF SHARES
If a shareholder fails to pay the amount due on allotment or on any call within the specified period, the directors may
cancel his shares. It is known as forfeiture of shares. In other words, forfeiture of shares means cancellation of shares
for non- payment of the amount due on allotment tor any call on shares.

RE-ISSUE OF FORFEITED SHARES:-

Directors of a company are empowered to re-issue the forfeited shares, if authorized by the Articles of Association.
Such forfeited shares can be re-issued on such terms, as they think fit. In other words, the directors are at liberty to re-
issue the forfeited shares at par, or at a premium or at discount. But if the forfeited shares are re-issued at discount,
the amount of discount allowed cannot exceed the amount previously received on these forfeited shares.

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