A company issued shares to the public. During the process, the following events took place. Arrange these events in sequence.

A) The company made calls on shares.

B) The company reissued the forfeited shares.

C) Some shareholders failed to pay the call money, resulting in Calls in Arrears.

D) The profit from the reissue was transferred to the Capital Reserve.

E) The company forfeited the defaulting shareholders’ shares.

Choose the correct answer from the options given below.

A → C → E → B → D

The correct answer is option 3- A → C → E → B → D.

A) The company made calls on shares- Calls are important for making shares fully paid-up and for collecting the full amount of shares from shareholders. After shares are allotted, a company can make calls. If shares are not fully called up by the time allotment is complete, the directors can ask for the remaining amount on shares whenever they decide to do so. It is also possible that the timing of call payments by shareholders is determined at the time of share issue and is given in the prospectus.

C) Some shareholders failed to pay the call money, resulting in Calls in Arrears. A few shareholders don't pay the call amount by the due date. If shareholders fail to pay the call amount, the outstanding or unpaid calls become known as "calls in arrears." As per Companies Act, 2013, the maximum rate of interest on calls in advance is 12%p.a. As per Companies Act, 2013, the maximum rate of interest on calls in arrears is 10% p.a.

E) The company forfeited the defaulting shareholders’ shares. If the calls in arrears are not paid within the stipulated time, the company may decide to forfeit the shares of the defaulting shareholders. The company typically issues a notice to shareholders to inform them about payment otherwise there shares will be forfeited. Forfeiture involves canceling the shares and removing the shareholder's rights.

B) The company reissued the forfeited shares. After the forfeiture of shares, the company has the option to reissue these forfeited shares to new shareholders. This process helps the company recover the value of the unpaid calls.

D) The profit from the reissue was transferred to the Capital Reserve.  If after reissued of shares, any balance is left in the share forfeited account, it is transferred to the capital reserve account.