Arrange the following steps in correct sequence. A. Call in ArrearsB.…

Arrange the following steps in correct sequence.

A. Call in Arrears
B. Notice to shareholders
C. Forfeiture of shares
D. Making calls
E. Reissue of shares

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → D, A, B, C, E

(D) Making calls – the company first calls up the money due on the shares.

(A) Call in Arrears – a shareholder who does not pay by the due date is in arrears.

(B) Notice to shareholders – he is given notice (at least 14 days) to pay, failing which the shares may be forfeited.

(C) Forfeiture of shares – on continued non-payment, the shares are forfeited.

(E) Reissue of shares – the forfeited shares can then be reissued.

NCERT (2026-27 edition):
Calls in Arrears – “It may happen that shareholders do not pay the call amount on due date. When any shareholder fails to pay the amount due on allotment or on any of the calls, such amount is known as ‘Calls in Arrears’/‘Unpaid Calls’.”

NCERT (2026-27 edition):
Accounting Treatment

Extract from the NCERT textbook

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. These provisions are usually based on Table F which authorise the directors to forefeit the shares for non-payment of calls made. For this purpose, they have to strictly follow the procedure laid down in this regard.”

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.”