The maximum amount of discount on the re-issue of forfeited shares will be :-

When shares are forfeited due to non-payment of calls, the company retains the amount already paid by the defaulting shareholder. This amount is called the forfeited amount.

Upon re-issue of these forfeited shares, the company can issue them at a discount (i.e., below their face value). However, there is a legal limitation on the maximum discount allowed.

Maximum Discount on Re-issue = Amount already received at the time of forfeiture

This is because the forfeited amount serves as a cushion. The company cannot offer a discount greater than what it has already collected from the original shareholder, otherwise it would result in a loss on the capital account.

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Illustration:

Suppose a share of ₹10 was issued, on which ₹7 was called up. The shareholder paid only ₹4, leaving ₹3 in arrears. The share is forfeited.

Amount already received (forfeited amount) = ₹4

When this share is re-issued:

• Maximum discount possible = ₹4
• Minimum re-issue price = ₹10 - ₹4 = ₹6

If re-issued at ₹8 (discount of ₹2):

• Amount available for Capital Reserve = ₹4 - ₹2 = ₹2

The logic is that the discount reduces the forfeited amount available for transfer to Capital Reserve. If discount exceeds the forfeited amount, there would be nothing left to cover the loss, which is not permitted.

Therefore, Option 4 is correct.