Page 167 - ISCDEBK-12

Joint Stock Company—Issue of Shares 7.3
22. Issue of Shares at Premium
It means the issue price of the share is higher than its nominal (face) value.
23. Shares Payable in Lump Sum
It means that shares are issued for a consideration payable in Lump sum, i.e., entire issue price of
a share is payable, along with the application.
24. Shares Payable in Instalments
It means that shares are issued for a consideration not payable in Lump sum but in parts, i.e.,
issue price of a share is payable, partly on application and partly on allotment and calls.
25. Undersubscription of Shares
The shares are said to be undersubscribed if the number of shares applied for is less than the
number of shares issued for subscription.
26. Oversubscription of Shares
When the company receives applications for more shares than issued, it is known as Oversubscription.
27. Pro rata Allotment
Pro rata allotment means allotment in proportion of shares applied for.
28. Calls-in-Arrears
It is that part of the calls money that has been called-up by the company but has not been received by it.
29. Calls-in-Advance
It is that amount which has not been called-up by the company but has been received by it.
30. Forfeiture of Shares
Forfeiture of shares means cancellation of allotted shares.

31. Reissue of Shares
Reissue of shares means sale of forfeited shares.

SUMMARY OF THE CHAPTER

• A company is an entity formed by an association of persons through the process of law for undertaking
(usually) a business.
The essential characteristics of a company are:
(i) It is a voluntary association of individuals coming into existence through the process of law for
under taking (usually) a business venture.
(ii) It is an artificial person created by the process of law.
(iii) It has a separate legal entity.
(iv) It has a perpetual succession, i.e., it can be created and wound up by law only.
(v) It has a common seal, i.e., official seal of the company.
(vi) The shares of a company can be transferred from one person to another.

• Share and Share Capital
Share means a share in the capital of a company and includes stock.
[Section 2(84) of the Companies Act, 2013]
Share capital of a company is divided into small units with a definite face value. Each of these small units
is called a share. Share capital is that part of the capital of a company which is represented by the total
nominal value of shares, it has issued.