Arrange the following steps as per the procedure of issue of shares :…

Arrange the following steps as per the procedure of issue of shares :

(a) Receipt of applications

(b) Allotment of shares

(d) Issue of prospectus

(e) Forfeiture of shares

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → (d), (a), (b), (e), (c)

A company first invites the public, then receives applications, and then allots shares. Forfeiture can come only after allotment, when a shareholder fails to pay, and reissue can come only after shares have been forfeited.

(d) Issue of prospectus — first. The prospectus is the invitation to the public to buy shares; nobody can apply before it is issued.

(a) Receipt of applications — second. Investors read the prospectus and apply, sending the application money to the bank named in it.

(b) Allotment of shares — third. Once the minimum subscription is received, the company allots shares, and the applicants become shareholders.

(e) Forfeiture of shares — fourth. Only a person who already holds shares can fail to pay allotment or call money, so forfeiture comes after allotment.

(c) Reissue of forfeited shares — last. A share can be reissued only after it has been forfeited.

NCERT (2026-27 edition):
Issue of Shares – “… The important steps in the procedure of share issue are :
• Issue of Prospectus: The company first issues the prospectus to the public. …
• Receipt of Applications: When prospectus is issued to the public, prospective investors intending to subscribe the share capital of the company would make an application along with the application money and deposit the same with a scheduled bank as specified in the prospectus. …
Allotment of Shares: If minimum subscription has been received, the company may proceed for the allotment of shares after fulfilling certain other legal formalities.”

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.”

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.”