Identify the correct sequence for the following at the time of Issue…

Identify the correct sequence for the following at the time of Issue of Shares.

(A) Allotment of shares
(B) Calls in arrears
(C) Application money received
(D) Forfeiture of shares
(E) Reissue of shares

Choose the correct answer from the options given below.

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (C), (A), (B), (D), (E)

The steps follow the life of a share from application to reissue:

(C) Application money received – the first instalment comes with the application.
(A) Allotment of shares – the second instalment is due on allotment.
(B) Calls in arrears – a shareholder fails to pay the allotment or call money.
(D) Forfeiture of shares – the company cancels the shares of the defaulter.
(E) Reissue of shares – the forfeited shares are issued again.

NCERT (2026-27 edition):
Issue of Shares – “A salient characteristic of the capital of a company is that the amount on its shares can be gradually collected in easy instalments spread over a period of time depending upon its growing financial requirement. The first instalment is collected along with application and is thus, known as application money, the second on allotment (termed as allotment money), and the remaining instalments are termed as first call, second call and so on. The word final is suffixed to the last instalment.”

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.”