Arrange the following in order with respect to the issue of shares.

(A) Application received

(B) Issue of prospectus

(C) Forfeiture of shares

(D) Allotment of Shares

(E) Reissue of forfeited shares

Choose the correct answer from the options given below:

(B), (A), (D), (C), (E)

The correct answer is option 3- (B), (A), (D), (C), (E). 

(B) Issue of prospectus-  The company issues a prospectus to the public, which is a document that provides information about the company and the shares it is issuing. The prospectus is an invitation to the public to subscribe to the shares.

(A) Application received- Prospective investors who wish to purchase shares in the company submit applications along with the application money. The application money is deposited into a scheduled bank as specified in the prospectus. The company must receive the minimum subscription amount within 120 days of issuing the prospectus. If the company does not receive the minimum subscription amount within this time period, it cannot proceed with the allotment of shares and must return the application money to investors within 130 days of issuing the prospectus.

(D) Allotment of Shares-   If the company receives the minimum subscription amount, it may proceed with the allotment of shares after fulfilling certain legal formalities. The company sends letters of allotment to the investors who have been allocated shares and letters of regret to investors who have not been allocated shares. Once shares have been allotted, a valid contract is formed between the company and the investors, who are now shareholders of the company. After the allotment of shares, share application money is transferred to share capital A/c.

(C) Forfeiture of 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 their shares will be forfeited. Forfeiture involves canceling the shares and removing the shareholder's rights.

(E) Reissue of 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.  If after reissued any balance is left in the share forfeited account, it is transferred to capital reserve account.