The maximum amount of discount on the re-issue of forfeited shares wi…

The correct answer is Option (4) → The amount already received at the time of forfeiture.

On forfeiture, the money already paid on the shares is kept by the company and credited to the Share Forfeiture Account. When the shares are reissued at a discount, that discount is debited to the Share Forfeiture Account, so it can never be more than the amount received on those shares before forfeiture. For example, 200 shares of Rs. 10 forfeited after Rs. 600 was received can be reissued at a discount of at most Rs. 600.

Option (1) The amount already called up at the time of forfeiture. — Incorrect. Part of the called up amount was never received; the limit is what was actually received.

Option (2) The amount of calls in arrear at the time of forfeiture. — Incorrect. Calls in arrears are the amounts not paid; they are the reason for forfeiture, not the limit of the discount.

Option (3) The amount of calls in advance at the time of forfeiture. — Incorrect. Calls in advance are paid before they fall due by shareholders who are up to date; a defaulting holder’s shares are forfeited for unpaid calls.