Arrange the following steps in correct sequence with regard to Shares of a company.

(A) Making Calls

(B) Forfeiture of Shares

(C) Issue of Prospectus

(D) Calls in Arrears

(E) Reissue of Shares

Choose the correct answer from the options given below :

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

The correct answer is option (2) : (C), (A), (D), (B), (E)

The correct sequence of accounting events for share capital:

*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.

* Making Calls: 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.

* Calls in arrear- 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.

* 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 there shares will be forfeited. Forfeiture involves canceling the shares and removing the shareholder's rights.

* Reissue of 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.