Quick Answer: What do you mean by reissue of shares?

Why are shares reissued?

Forfeiture of shares refers to the cancelation of shares. Sometimes, shareholders may be unable to pay the money due on allotment or calls on the due date. In this case, the company may forfeit such shares. … Consequently, the Company may opt for Reissue of Shares.

What ways forfeited shares are reissued?

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 profit on reissue of shares?

Forfeited shares can be re-issued. Any amount of profit on re-issue is a capital receipt and should be transferred to capital reserve account because this profit is a capital gain for the company.

How do you calculate share reissued rate?

At the time of reissue of forfeited shares a discount of Rs 2 per share is allowed so the total amount of discount of Rs 400 is adjusted from the forfeited amount of Rs 600 and the balance amount of Rs 200 is transferred to Capital Reserve A/c being a capital gain.

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Can a company cancel shares?

Private companies may wish to strike out the original shares, however, the shares cannot simply disappear. More will need to be done to cancel these shares and a few options are considered below.

When all 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 maximum amount of discount on reissue of shares?

Now on reissue of such shares at discount, the maximum discount could be Rs. 35.

In which account profit on reissue of forfeited shares is transferred?

Answer: If the discount allowed on reissue of shares is less than the forfeited amount, there will be some balance left in the Forfeited Account, which should be transferred to capital reserve, because it is a profit of capital nature. ADVERTISEMENTS: Example: A company forfeited shares of Rs. 100 each.

What amount of gain on reissue will be transferred?

1200 is the gain that will be transferred to the General Reserve.

What is the restriction on reissue of forfeited shares at discount?

Board will decide the new price of reissue of shares. These shares can be reissued at par value, at premium value or at discount. There is no restriction on amount of premium for reissue of shares.

What is the minimum price at which a company can reissue its forfeited shares?

The Company can reissue its fortified shares at par, at premium or at discount but the reissue price together with the amount already received on such shares should not be less than the called up amount on each share.

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