Company Accounts

Share Capital

Medium

Comprehension:

Read the following passage and answer the questions

On January 1, 2024, the Director of X Ltd. issued for public subscription 50,000 equity shares of Rs. 10 each at Rs. 12 per share payable, Rs. 5 on application (including premium), Rs. 4 on allotment and the balance on call on May 01, 2024. The issue was closed on February 10, 2024 by which date applications for 70,000 shares were received. Of the cash received Rs. 40,000 was returned and Rs. 60,000 was applied to the amount due on allotment, the balance of which was paid on February 16, 2024. All the shareholders paid the call due on May 01, 2024 with the exception of an allottee of 500 shares. These shares were forfeited on September 29, 2024 and reissued as fully paid at Rs. 8 per share on November 01, 2024. The company, as a matter of policy, does not maintain a calls-in-arrears account.

On Forfeiture of 500 shares for non-payment of call money, what amount will be credited to Shares Forfeiture Account?

Rs. 2500

Rs. 3500

Rs. 4500

Rs. 1500

✅ Correct Option: 2

Step 1: Separate Capital from Premium

First, we need to determine how much of the issue price goes towards the actual share capital versus the securities premium.

Total Issue Price: Rs. 12 (Rs. 10 Face Value + Rs. 2 Premium)

Application Stage: Rs. 5 total. This splits into Rs. 3 for Capital and Rs. 2 for Premium.

Allotment Stage: Rs. 4 for Capital.

Call Stage (Balance): Rs. 12 - (Rs. 5 + Rs. 4) = Rs. 3 for Capital.

Step 2: Understand the Forfeiture Rule

When a company forfeits shares, the Shares Forfeiture Account is only credited with the amount the shareholder has already paid towards the share capital. Any money collected for the securities premium is legally locked and cannot be moved to the forfeiture account.

Step 3: Calculate the Forfeited Amount

The problem states the shareholder (holding 500 shares) only failed to pay the final call. This means they successfully paid the application and allotment stages. Let's calculate the capital they contributed:

Capital paid during Application: 500 shares × Rs. 3 = Rs. 1,500

Capital paid during Allotment: 500 shares × Rs. 4 = Rs. 2,000

Total amount credited to Forfeiture Account: Rs. 1,500 + Rs. 2,000 = Rs. 3,500

The correct answer is Rs. 3500.

2026: 23 May Shift 2

The amount of security premium reserve cannot be used for:

2026: 12 May Shift 1

As per Section 68 of The Companies Act, 2013, the company cannot buy their own shares from which of the following source:

2025: 15 May Shift 1

While issuing the share capital for public subscription where there is no articles of association of its own, the following provisions of Table A will apply:

(A) A period of one month must elapse between two calls.

(B) The amount of call should not exceed 25% of the face value of the share.

(D) Calls must be made on a uniform basis on all shares within the same class.

Choose the correct answer from the options given below:

2023: 28 May Shift 1

Match List - I with List - II.

List - I	List - II
(A) Application money should be at least ____% of the face value of the share	(I) 25%
(B) The amount of Call should not exceed ____% of the face value of the share	(II) 90%
(C) Minimum subscription of capital cannot be less than ____ of the issued amount according to SEBI guidelines	(III) 10%
(D) Interest charged on call-in-arrears is @ ______ p.a.	(IV) 5%

Choose the correct answer from the options given below :

2024

400 shares of ₹ 50 each issued at par were forfeited for non-payment of final call of ₹ 10 per share. These shares were reissued at ₹ 45 per share as fully paid-up. The amount transferred to capital reserve is:

2026: 31 May Shift 1

In case of issue of shares, the 'minimum subscription' of capital cannot be less than .......... of the issued amount according to SEBI (Disclosure and Investor Protection) Guidelines, 2000.

On Forfeiture of 500 shares for non-payment of call money, what amount will be credited to Shares Forfeiture Account?

Solution

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