Arrange the following in a sequence related to the issue and redempti…

Arrange the following in a sequence related to the issue and redemption of shares

(A) Forfeiture of shares

(B) Reissue of shares

(D) Transfer of share forfeited account balance to capital reserve A/c

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → (C), (A), (B), (D)

Each step can happen only after the one before it.

(C) Calls in arrears — first: a call is made and some shareholders do not pay it.

(A) Forfeiture of shares — next: the company can forfeit the shares only after the call money has remained unpaid.

(B) Reissue of shares — then: only shares that have been forfeited can be issued again.

(D) Transfer of share forfeited account balance to capital reserve A/c — last: the gain on the reissued shares is known only after they have been reissued, and only then is it transferred to Capital Reserve.

NCERT (2026-27 edition):
Calls in Arrears – “It may happen that shareholders do not pay the call amount on due date. When any shareholder fails to pay the amount due on allotment or on any of the calls, such amount is known as ‘Calls in Arrears’/‘Unpaid Calls’.”

NCERT (2026-27 edition):
Forfeiture of Shares – “It may happen that some shareholders fail to pay one or more instalments, viz. allotment money and/or call money. In such circumstances, the company can forfeit their shares, i.e. cancel their allotment and treat the amount already received thereon as forfeited to the company within the framework of the provisions in its articles.”

NCERT (2026-27 edition):
Reissue of Forfeited Shares – “The directors can either cancel or re-issue the forefeited shares. In most cases, they reissue such shares which may be at par, at premium or at a discount. … The balance, if any, left in the Share-Forfeited Account relating to reissued Shares, should be treated as capital profit and transferred to Capital Reserve Account.”