Arrange the following in the context of Issue of shares. A. Making ca…

Arrange the following in the context of Issue of shares.

A. Making calls on shares
B. Reissue of fortified shares
C. Calls in Arrear
D. Transferring profit on reissue of shares to Capital Reserve
E. Forfeiture of shares

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → A, C, E, B, D

Each event in the issue of shares can happen only after the one before it:

A. Making calls on shares — the company first calls the money due.

C. Calls in Arrear — a call not paid on the due date becomes calls in arrears.

E. Forfeiture of shares — for non-payment of calls the directors may forfeit the shares.

B. Reissue of fortified shares — forfeited shares may then be reissued at par, premium or discount.

D. Transferring profit on reissue of shares to Capital Reserve — the balance of the forfeiture account on the reissued shares is transferred last.

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):
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.”

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. Forfeited shares may be reissued as fully paid at a par, premium, discount.”

NCERT (2026-27 edition):
Reissue of Forfeited Shares – “… The balance, if any, left in the Share-Forfeited Account relating to reissued Shares, should be treated as capital profit and transferred to Capital Reserve Account.”